Refer to the diagram below. Points A, B, C, D, and E show:
A) that the opportunity cost of bicycles increases, while that of computers is constant.
B) combinations of bicycles and computers which society can produce by using its resources efficiently.
C) that the opportunity cost of computers increases, while that of bicycles is constant.
D) that society's demand for computers is greater than its demand for bicycles.

Question

Refer to the diagram below. Points A, B, C, D, and E show: 
A) that the opportunity cost of bicycles increases, while that of computers is constant. 
B) combinations of bicycles and computers which society can produce by using its resources efficiently. 
C) that the opportunity cost of computers increases, while that of bicycles is constant. 
D) that society's demand for computers is greater than its demand for bicycles.

Quizplus · Accepted Answer

The points on the curve show the combinations of bicycles and computers that society can produce using its resources efficiently, meaning that all available resources are being used to produce the optimal combination of bicycles and computers. The slope of the curve shows the opportunity cost of producing one good in terms of the other. Since the curve is downward sloping, this means that as more of one good is produced, the opportunity cost of producing an additional unit of that good increases, while the opportunity cost of producing the other good remains constant. Therefore, the correct choice is B.

Refer to the Diagram Below