A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?
A)1 apple
B)5/4 of a banana
C)4 bananas
D)4/5 of a banana
E)None of the above answers is correct.

Question

Quizplus · Accepted Answer

The opportunity cost of an apple is the number of bananas forgone to produce one more apple. Here, 4 bananas are forgone to gain 5 apples, so the opportunity cost of one apple is 4/5 of a banana.

A Country Produces Only Apples and Bananas