The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. Refer to the above table.What is the opportunity cost of producing the third unit of capital goods?
A)4 units of consumer goods
B)5 units of consumer goods
C)6 units of consumer goods
D)7 units of consumer goods

Question

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.  Refer to the above table.What is the opportunity cost of producing the third unit of capital goods?
A)4 units of consumer goods 
B)5 units of consumer goods 
C)6 units of consumer goods 
D)7 units of consumer goods

Quizplus · Accepted Answer

To produce the third unit of capital goods, the economy must give up producing 6 units of consumer goods (moving from point A to point B on the production possibilities curve). This is the opportunity cost of producing the third unit of capital goods.

The Production Possibilities Curve Below Shows the Hypothetical Relationship Between