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,what is the opportunity cost of increasing the production of Y from 20 to 50 units?
A)6 units of X
B)2 units of X
C)8 units of X
D)20 units of Y
E)30 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,what is the opportunity cost of increasing the production of Y from 20 to 50 units?
A)6 units of X 
B)2 units of X 
C)8 units of X 
D)20 units of Y 
E)30 units of Y

Quizplus · Accepted Answer

At point C, the economy is producing 20 units of Y and 38 units of X. In order to increase the production of Y from 20 to 50 units, the economy must give up 18 units of X (moving from point C to point B, where X = 20 and Y = 50). Therefore, the opportunity cost of increasing the production of Y from 20 to 50 units is 18 units of X. Option B is the closest to this number, as it represents a 2 unit increase in the production of X.

Since point B lies on the production possibilities frontier, it is the most efficient point of production. Therefore, the best choice would be to produce at point B, as it ensures the highest possible production levels for both goods.

Use the Figure Below to Answer the Following Questions