Refer to the information provided in Figure 2.4 below to answer the question(s) that follow. Figure 2.4
-According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A) increases.
B) decreases.
C) remains constant.
D) initially increases, then decreases.

Question

Refer to the information provided in Figure 2.4 below to answer the question(s) that follow.  Figure 2.4
-According to Figure 2.4, as the economy moves from Point E to Point A, the opportunity cost of hybrid cars, measured in terms of motorcycles
A) increases. 
B) decreases. 
C) remains constant. 
D) initially increases, then decreases.

Quizplus · Accepted Answer

As the economy moves from Point E to Point A on a production possibility frontier, it typically means that more resources are being allocated to produce hybrid cars and fewer resources to produce motorcycles. This shift usually results in an increasing opportunity cost for producing hybrid cars in terms of motorcycles because resources are not equally efficient in producing all goods. Thus, as more of those resources are diverted from motorcycle production (where they might be more efficient) to hybrid car production (where they might be less efficient), it takes away increasingly more motorcycle production to produce each additional hybrid car.

Refer to the Information Provided in Figure 2