Figure 18.1
-Refer to Figure 18.1. The opportunity cost of producing sunglasses in Duckland is:

Question

Quizplus · Accepted Answer

The opportunity cost of producing sunglasses in Duckland is the slope of the production possibilities frontier (PPF). From point A to point B, the economy must give up 5 umbrellas to produce 3 sunglasses, which means the opportunity cost of producing 1 pair of sunglasses is 5/3 umbrellas. Therefore, the opportunity cost of producing 1 umbrella is 3/5 sunglasses, which is equivalent to 0.6 sunglasses. Since 2 sunglasses can be produced by giving up 1.2 umbrellas (2/1.2=10/6=5/3), the opportunity cost of producing 2 sunglasses is 5/3 x 2 = 10/3 umbrellas. Thus, the opportunity cost of producing 1 additional pair of sunglasses is 10/3 - 5/3 = 5/3 umbrellas, which is also the slope of the PPF at point B. Therefore, the answer is D, 5/6 umbrellas.

Figure 18.1 -Refer to Figure 18.1. the Opportunity Cost of Producing Sunglasses