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 total opportunity cost of producing two units of capital goods?
A)4 units of consumer goods
B)5 units of consumer goods
C)9 units of consumer goods
D)13 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 total opportunity cost of producing two units of capital goods?
A)4 units of consumer goods 
B)5 units of consumer goods 
C)9 units of consumer goods 
D)13 units of consumer goods

Quizplus · Accepted Answer

To produce 2 units of capital goods, the economy must give up producing 9 units of consumer goods. This is the total opportunity cost of producing two units of capital goods. Therefore, the best choice is to produce at point B, where the economy is producing 4 units of capital goods and 7 units of consumer goods, maximizing both production and utility.

The Production Possibilities Curve Below Shows the Hypothetical Relationship Between