When operating on its PPF, a country can produce 2 tons of butter and 200 cars OR 3 tons of butter and 150 cars. The opportunity cost of 1 ton of butter is ________ cars per ton of butter.
A) 300
B) 200
C) 50
D) 0.75

Question

Quizplus · Accepted Answer

The opportunity cost of producing 1 additional ton of butter is the number of cars that must be given up to produce that extra ton. Moving from producing 2 tons of butter and 200 cars to 3 tons of butter and 150 cars, the country gives up 50 cars to produce the additional ton of butter. Therefore, the opportunity cost of 1 ton of butter is 50 cars.

When Operating on Its PPF, a Country Can Produce 2