Refer to the information provided in Figure 2.5 below to answer the questions that follow. Figure 2.5
-Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A) 40 plasma TVs that must be forgone to produce 120 additional LCD TVs.
B) 20 plasma TVs that must be forgone to produce 30 additional LCD TVs.
C) 30 LCD TVs that must be forgone to produce 40 additional plasma TVs.
D) 120 LCD TVs that must be forgone to produce 20 additional plasma TVs.

Question

Refer to the information provided in Figure 2.5 below to answer the questions that follow.  Figure 2.5
-Refer to Figure 2.5. The economy is currently at Point B. The opportunity cost of moving from Point B to Point A is the
A) 40 plasma TVs that must be forgone to produce 120 additional LCD TVs. 
B) 20 plasma TVs that must be forgone to produce 30 additional LCD TVs. 
C) 30 LCD TVs that must be forgone to produce 40 additional plasma TVs. 
D) 120 LCD TVs that must be forgone to produce 20 additional plasma TVs.

Quizplus · Accepted Answer

The opportunity cost of moving from Point B to Point A is the amount of one good that must be given up in order to produce more of the other good. In this case, moving from Point B to Point A means giving up some plasma TVs to produce more LCD TVs. From the graph, we can see that at Point B, the economy is producing 60 plasma TVs and 90 LCD TVs. To move to Point A, the economy must give up 20 plasma TVs in order to produce 30 more LCD TVs. Therefore, the opportunity cost is 20 plasma TVs that must be forgone to produce 30 additional LCD TVs.

Refer to the Information Provided in Figure 2