Suppose an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y. What is the maximum number of units of good Y the economy can produce?
A)10
B)200
C)20
D)500

Question

Quizplus · Accepted Answer

If the opportunity cost of 1 unit of X is 2 units of Y, then the opportunity cost of 5 units of X would be 10 units of Y. Therefore, the maximum number of units of Y that can be produced with the given resources is 20 (10 units of X times the opportunity cost of 2 units of Y). Therefore, the best choice is C.

Suppose an Economy Can Produce a Maximum of 10 Units