Currently an economy is producing at a point on its production possibilities frontier for goods X and Y.It is producing 100 units of good X and the opportunity cost of producing 1X is 3Y.If good X is produced at increasing opportunity costs,then when the economy produces 120 units of good X (on the same PPF)the opportunity cost of producing 1X could be ______Y.
A) 4
B) 2.5
C) 2
D) 1
E) all of the above

Question

Quizplus · Accepted Answer

Given the economy is producing at increasing opportunity costs, producing more of good X (moving from 100 to 120 units) would mean sacrificing more of good Y per unit of X produced. Therefore, the opportunity cost of producing 1 additional unit of X would increase, making 4Y a possible higher opportunity cost.

Currently an Economy Is Producing at a Point on Its