An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X.Furthermore,the opportunity cost between the two goods is always constant.Which of the following combinations of the two goods,X and Y,is it possible for the economy to produce?
A) 700X, 280Y
B) 600X, 250Y
C) 400X, 150Y
D) 100X, 600Y
E) 300X, 280Y

Question

Quizplus · Accepted Answer

The opportunity cost of producing X is constant, which means that the economy can produce either 1,000X or 400Y with the same resources. Therefore, any combination of X and Y that lies on the line connecting these two points is possible for the economy to produce. Choice A (700X, 280Y) lies on this line, so it is possible for the economy to produce this combination.

An Economy Can Produce Either of These Two Combinations of Goods