Exhibit 2-8 Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s)of good Y.

Question

Exhibit 2-8  Refer to Exhibit 2-8. For Maya, the opportunity cost of producing one unit of good X is ___________ unit(s)of good Y.

Quizplus · Accepted Answer

The slope of the production possibility frontier (PPF) represents the opportunity cost of producing one good in terms of the other. For Maya, the slope of the PPF is -0.5 (rise of -1 unit of Y over run of 2 units of X). This means that the opportunity cost of producing one unit of good X is 0.5 units of good Y. Thus, the answer is D. Maya should produce X until the opportunity cost of producing X (0.5 units of Y) equals the market price of Y. Beyond that point, she should produce Y.