Table 2-1
Production Possibilities for Toyland

-Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of fire trucks from 450 to 500?

Question

Table 2-1
Production Possibilities for Toyland
 
-Refer to Table 2-1. What is the opportunity cost to Toyland of increasing the production of fire trucks from 450 to 500?

Quizplus · Accepted Answer

According to the table, to increase the production of fire trucks from 450 to 500, Toyland needs to divert resources from producing dolls. The amount of resources needed to produce 50 additional fire trucks is the opportunity cost of increasing the production of fire trucks. This can be calculated as (500-450)=50. The corresponding loss in the production of dolls is (600-500)=100. Therefore, the opportunity cost of increasing the production of fire trucks from 450 to 500 is 100 dolls. Option C is the correct answer.

Table 2-1 Production Possibilities for Toyland