-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?
A) 1 million hats
B) 3 million hats
C) 1/2 million hats
D) 2 million hats

Question

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?
A) 1 million hats 
B) 3 million hats 
C) 1/2 million hats 
D) 2 million hats

Quizplus · Accepted Answer

The opportunity cost is the amount of the other good that must be given up to produce more of one good. If increasing banana production from two to three million pounds requires sacrificing 1 million hats, then the opportunity cost is 1 million hats.

-In the Production Possibilities Frontier Depicted in the Figure Above