-An economy produces at point a on the PPF shown in the above figure. A drought reduces the amount of wheat produced and the economy produces at point b. The opportunity cost of a unit of wheat
A) remains the same.
B) increases.
C) is impossible to calculate without numbers on the axes.
D) decreases.

Question

-An economy produces at point a on the PPF shown in the above figure. A drought reduces the amount of wheat produced and the economy produces at point b. The opportunity cost of a unit of wheat
A) remains the same. 
B) increases. 
C) is impossible to calculate without numbers on the axes. 
D) decreases.

Quizplus · Accepted Answer

When an economy moves from point a to point b on the PPF due to a drought, it means that to produce the same amount of another good, more wheat must be given up due to the reduced availability of resources for wheat production. This indicates an increase in the opportunity cost of producing wheat.

-An Economy Produces at Point a on the PPF Shown