Figure 3-5
Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier
-Refer to Figure 3-5.Puneet's opportunity cost of one purse is

Question

Figure 3-5
Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier  
-Refer to Figure 3-5.Puneet's opportunity cost of one purse is

Quizplus · Accepted Answer

To find the opportunity cost of one purse, we need to look at the slopes of the Production Possibility Frontiers (PPFs). The slope of the PPF represents the opportunity cost of producing one good in terms of the other good.

For Puneet, the slope of the PPF is -4/5, meaning that to produce one purse, she would have to give up 4/5 of a wallet. Therefore, her opportunity cost of one purse is 4/5 wallet.

For Chirag, the slope of the PPF is -2/3, meaning that to produce one purse, he would have to give up 2/3 of a wallet. Therefore, his opportunity cost of one purse is 2/3 wallet.

The best choice is B because it correctly identifies the opportunity costs of both Puneet and Chirag, and matches them with the correct numbers.

Figure 3-5 Puneet's Production Possibilities Frontier Chirag's Production Possibilities Frontier