-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?
A) 1/2 hat per pound of bananas
B) 1 hat per pound of bananas
C) 2 hats per pound of bananas
D) 3 hats per pound of bananas

Question

-In the production possibilities frontier depicted in the figure above, what is the opportunity cost of increasing the production of bananas from two million pounds to three million pounds?
A) 1/2 hat per pound of bananas 
B) 1 hat per pound of bananas 
C) 2 hats per pound of bananas 
D) 3 hats per pound of bananas

Quizplus · Accepted Answer

The opportunity cost of producing an additional unit of a good is the amount of the other good that must be forgone. In this scenario, moving from producing two million pounds of bananas to three million pounds of bananas requires giving up 1 hat, which means the opportunity cost is 1 hat per additional pound of bananas produced.

-In the Production Possibilities Frontier Depicted in the Figure Above