Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.

-Refer to Table 2.4.1. For Vulcan, the opportunity cost of producing an additional unit of Y is
A)2/3 units of X.
B)1/2 units of X.
C)2 units of X.
D)3 units of X.
E)4 units of X.

Question

Use the figure below to answer the following questions.
Table 2.4.1
The planets of Vulcan and Romulus each produce goods X and Y.
The following table gives points on their production possibilities frontiers.
 
-Refer to Table 2.4.1. For Vulcan, the opportunity cost of producing an additional unit of Y is
A)2/3 units of X. 
B)1/2 units of X. 
C)2 units of X. 
D)3 units of X. 
E)4 units of X.

Quizplus · Accepted Answer

To produce an additional unit of Y, Vulcan has to give up 1/2 unit of X. This is the opportunity cost of producing an additional unit of Y. Therefore, the best choice for Vulcan depends on the relative prices of goods X and Y. If the price of good Y is higher than its opportunity cost (1/2 unit of X), Vulcan should produce more of Y. If the price of good X is higher than its opportunity cost (2 units of Y), Vulcan should produce more of X.

Use the Figure Below to Answer the Following Questions