When operating on its PPF, a country can produce two tonnes of butter and 200 cars OR three tonnes of butter and 150 cars. The opportunity cost of one tonne of butter is ________ cars per tonne of butter.
A)50
B)0.75
C)300
D)200

Question

Quizplus · Accepted Answer

The opportunity cost of one tonne of butter is the number of cars that must be given up to produce an additional tonne of butter. Moving from two tonnes of butter and 200 cars to three tonnes of butter and 150 cars, the country gives up 50 cars to produce one more tonne of butter. Thus, the opportunity cost is 50 cars per tonne of butter.

When Operating on Its PPF, a Country Can Produce Two