The accompanying figure shows the production possibilities curve for the island of Genovia:
The opportunity cost of producing one ton of agricultural products in Genovia is:
A)1,000 cars.
B)1 car.
C)1/5 of a car.
D)1/50 of a car.

Question

The accompanying figure shows the production possibilities curve for the island of Genovia:   
The opportunity cost of producing one ton of agricultural products in Genovia is:
A)1,000 cars. 
B)1 car. 
C)1/5 of a car. 
D)1/50 of a car.

Quizplus · Accepted Answer

This country would have to give up 1,000 cars to gain 50,000 tons of agricultural products. Thus, the opportunity cost of one ton of agricultural products is 1,000/50,000 = 1/50 of a car. More generally, the opportunity cost of producing one more unit of the good on the x-axis equals the absolute value of the slope of the PPC.

The Accompanying Figure Shows the Production Possibilities Curve for the Island