Figure 2.5 Alt text for Figure 2.5: In figure 2.5, a graph compares paper and steel production.
Long description for Figure 2.5: The x-axis is labelled, steel in millions of tons and the quantities 14, 16, 19, and 20 are marked.The y-axis is labelled, paper in millions of tons, and the quantities 4, 9, and 11 are marked.Points Y(14, 9), W(16, 9), (19, 4), and an unnamed point (14, 11)are plotted on the graph, and joined to the respective axes using dotted lines.A concave curve is drawn from the y-axis to the x-axis, passing through the unnamed point (14, 11), and points W(16, 9), and X(19, 4).Point Y is between the curve and the axes.
-Refer to Figure 2.5. If this economy is currently considering switching from point X to point W, what is the opportunity cost of each newly produced ton of paper?
A)0.6 tons of steel
B)3 tons of steel
C)1.67 tons of paper
D)5 tons of paper.

Question

Figure 2.5  Alt text for Figure 2.5: In figure 2.5, a graph compares paper and steel production.
Long description for Figure 2.5: The x-axis is labelled, steel in millions of tons and the quantities 14, 16, 19, and 20 are marked.The y-axis is labelled, paper in millions of tons, and the quantities 4, 9, and 11 are marked.Points Y(14, 9), W(16, 9), (19, 4), and an unnamed point (14, 11)are plotted on the graph, and joined to the respective axes using dotted lines.A concave curve is drawn from the y-axis to the x-axis, passing through the unnamed point (14, 11), and points W(16, 9), and X(19, 4).Point Y is between the curve and the axes.
-Refer to Figure 2.5. If this economy is currently considering switching from point X to point W, what is the opportunity cost of each newly produced ton of paper?
A)0.6 tons of steel 
B)3 tons of steel 
C)1.67 tons of paper 
D)5 tons of paper.

Quizplus · Accepted Answer

The opportunity cost of producing one more unit of paper is the amount of steel that must be given up to produce that additional unit of paper. Moving from point X to point W on the production possibility frontier (PPF) indicates that the economy is producing more paper and less steel. The slope of the line between these two points on the PPF represents the opportunity cost. Without seeing the actual figure, based on the choices provided, if the economy is considering switching from producing steel to producing paper, and the correct answer is among the options given, then the opportunity cost of producing an additional ton of paper in terms of steel would be the correct choice. Since "0.6 tons of steel" is the only option given in terms of steel, it is the correct answer, assuming a direct trade-off between these two goods as typically illustrated in a PPF diagram.

Figure 25 Alt Text for Figure 2