FIGURE 2-2

-Refer to Figure 2-2. What is the opportunity cost of producing an additional cake equal to?

Question

FIGURE 2-2
 
-Refer to Figure 2-2. What is the opportunity cost of producing an additional cake equal to?

Quizplus · Accepted Answer

The opportunity cost of producing an additional cake is the amount of the other good that must be given up to produce one more unit of the first good. In this case, moving from producing 0 cakes to 1 cake reduces cupcake production from 40 to 36, a loss of 4 cupcakes, thus making the opportunity cost of one additional cake equal to 4 cupcakes.

FIGURE 2-2 -Refer to Figure 2-2. What Is the Opportunity Cost of the Opportunity