One point on a PPF shows production levels at 50 tons of coffee and 100 tons of bananas. Remaining on the PPF, an increase of banana production to 140 tons shows coffee production at 30 tons. Still remaining on the PPF, coffee production at 10 tons allows banana production at 160 tons. The opportunity cost of a ton of bananas is
A) constant because coffee production decreased by the same amount each time.
B) decreasing, since the increase in banana production is less at each point considered.
C) 16 to 1, that is every 1 ton of coffee given up will result in 16 more tons of bananas.
D) increasing from 1/2 ton of coffee per ton of bananas to 1 ton of coffee per ton of bananas.

Question

Quizplus · Accepted Answer

The opportunity cost of producing bananas increases as the production shifts from coffee to bananas, indicating a concave PPF where the opportunity cost of producing an additional unit increases as you produce more of that good.

One Point on a PPF Shows Production Levels at 50