Use the figure below to answer the following questions. Figure 2.1.2
-Refer to the production possibilities frontier in Figure 2.1.2.At point C,the opportunity cost of producing one more unit of X is
A)1 unit of Y.
B)1 unit of X.
C)8 units of X.
D)20 units of X.
E)20 units of Y.

Question

Use the figure below to answer the following questions.  Figure 2.1.2
-Refer to the production possibilities frontier in Figure 2.1.2.At point C,the opportunity cost of producing one more unit of X is
A)1 unit of Y. 
B)1 unit of X. 
C)8 units of X. 
D)20 units of X. 
E)20 units of Y.

Quizplus · Accepted Answer

The opportunity cost of producing one more unit of X at point C is the amount of Y that must be given up to produce that additional unit of X. This is represented by the slope of the production possibilities frontier at point C. Since the question specifies the opportunity cost in terms of units of Y, and given the typical interpretation of a production possibilities frontier, the correct answer involves the trade-off in terms of Y, not X. Without seeing the actual figure, the general principle is that the opportunity cost is measured in terms of the alternative forgone, which in this case is specified as units of Y.

Use the Figure Below to Answer the Following Questions