Figure 3-1

-Refer to Figure 3-1.The opportunity cost of 2 bushels of corn for Cliff is
A)2 bushels of wheat.
B)3 bushels of wheat.
C)6 bushels of wheat.
D)12 bushels of wheat.

Question

Figure 3-1
 
-Refer to Figure 3-1.The opportunity cost of 2 bushels of corn for Cliff is
A)2 bushels of wheat. 
B)3 bushels of wheat. 
C)6 bushels of wheat. 
D)12 bushels of wheat.

Quizplus · Accepted Answer

In order to determine the opportunity cost, we need to look at the slope of the production possibility frontier (PPF) at the point where Cliff is currently producing. The slope of the PPF represents the opportunity cost of producing one good in terms of the other. At the current point, the slope is steep, indicating that Cliff has a comparative advantage in producing wheat over corn. Thus, the opportunity cost of 2 bushels of corn is 3 bushels of wheat. Therefore, the best choice is B.

Figure 3-1 -Refer to Figure 3-1.The Opportunity Cost of 2 Bushels of of 2