Refer to the above diagram.Starting at point A, the opportunity cost of producing each successive unit of tractors is:
A)a constant 2 units of bread.
B)2, 4, 6, and 8 units of bread.
C)8, 6, 4, and 2 units of bread.
D)the reciprocal of the output of tractors.

Question

Refer to the above diagram.Starting at point A, the opportunity cost of producing each successive unit of tractors is:
A)a constant 2 units of bread. 
B)2, 4, 6, and 8 units of bread. 
C)8, 6, 4, and 2 units of bread. 
D)the reciprocal of the output of tractors.

Quizplus · Accepted Answer

As we move along the Production Possibility Frontier (PPF) from point A to B to C to D, we see that the opportunity cost of producing each additional unit of tractors increases. This is reflected by the steeper slope of the PPF at each successive point.

At point A, 2 units of bread are given up to produce 1 tractor. At point B, 4 units of bread are given up to produce 2 tractors (an opportunity cost of 2 units of bread per tractor). At point C, 6 units of bread are given up to produce 3 tractors (an opportunity cost of 2 units of bread per tractor). Finally, at point D, 8 units of bread are given up to produce 4 tractors (an opportunity cost of 2 units of bread per tractor).

Therefore, the opportunity cost of producing each successive unit of tractors is a constant 2 units of bread, and the best choice(s) is option B.

Refer to the Above Diagram