Figure 2.2
-Figure 2.2 presents a production possibilities curve for a country that can either produce highways or provide people with medical care in a given year.The opportunity cost of the fourth new highway built in a year is:

Question

Quizplus · Accepted Answer

According to the production possibilities curve, in order to produce one more highway, the country has to give up producing medical care for some amount of people. The opportunity cost of the fourth highway is the slope of the curve at that point, which is the change in medical care units divided by the change in highway units. At the point where the fourth highway is produced, this slope is equal to (90,000-50,000)/(4-3) = 40,000. Therefore, the opportunity cost of the fourth new highway is 40,000 people provided with medical care. The closest option is B, which is 70,000 people provided with medical care, so that is the best choice.

Figure 2.2 -Figure 2.2 Presents a Production Possibilities Curve for a Country