Currently an economy is producing at a point on its production possibilities frontier for goods X and Y. It is producing 100 units of good X and the opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy produces 120 units of good X (on the same PPF)the opportunity cost of producing 1X could be ______Y.
A)4
B)2.5
C)2
D)1

Question

Quizplus · Accepted Answer

When an economy produces at increasing opportunity costs, producing more of one good results in a higher opportunity cost. Therefore, as the production of good X increases from 100 to 120 units, the opportunity cost of producing 1X could increase from 3Y to 4Y.

Currently an Economy Is Producing at a Point on Its