Currently an economy is producing (at a point on its production possibilities frontier)100 units of good X and the opportunity cost of producing 1X is 3Y.If good X is produced at increasing opportunity costs,then when the economy produces 120 units of good X (on the same PPF)the opportunity cost of producing 1Y (not 1X)could be
A)1/4X.
B)1/3X.
C)1/2X.
D)1X.
E)none of the above

Question

Quizplus · Accepted Answer

When producing at increasing opportunity costs, the opportunity cost of producing additional units of a good increases. If the opportunity cost of producing 1X is 3Y, then the opportunity cost of producing 1Y is 1/3X. As more of good X is produced, the opportunity cost of producing 1Y could increase, making 1/4X a possible new opportunity cost.

Currently an Economy Is Producing (At a Point on Its