Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.

-Refer to Table 2.1.1. As we increase the production of X,
A)the amount of Y that is given up for each additional unit of X decreases.
B)the output of Y increases.
C)the opportunity cost of each additional unit of X increases.
D)unemployment increases.
E)the amount of X increases at an increasing rate.

Question

Table 2.1.1
The following table gives points on the production possibilities frontier for goods X and Y.

-Refer to Table 2.1.1. As we increase the production of X,
A)the amount of Y that is given up for each additional unit of X decreases. 
B)the output of Y increases. 
C)the opportunity cost of each additional unit of X increases. 
D)unemployment increases. 
E)the amount of X increases at an increasing rate.

Quizplus · Accepted Answer

As we increase the production of X and move along the production possibilities frontier, we have to give up increasing amounts of Y to produce each additional unit of X. This increasing opportunity cost of producing X is reflected by the shape of the PPF (which is concave or bowed outward). Therefore, the correct answer is (C) the opportunity cost of each additional unit of X increases. The other options are incorrect.

Table 2.1.1 The Following Table Gives Points on the Production Possibilities Frontier