At one point along a PPF, 50 tons of coffee and 100 tons of bananas are produced. At another point along the same PPF, 30 tons of coffee and 140 tons of bananas are produced. The opportunity cost of a ton of coffee between these points is
A) 7/5 of a ton of bananas per ton of coffee.
B) 1/2 of a ton of bananas per ton of coffee.
C) 5/7 of a ton of bananas per ton of coffee.
D) 2 tons of bananas per ton of coffee.

Question

Quizplus · Accepted Answer

The opportunity cost of producing an additional ton of coffee is the amount of bananas that must be given up. Moving from 30 to 50 tons of coffee, 20 tons of coffee are produced, and 40 tons of bananas are given up (140 - 100). Thus, the opportunity cost is 40/20 = 2 tons of bananas per ton of coffee.

At One Point Along a PPF, 50 Tons of Coffee