Consider the production possibilities frontier in the figure shown.The opportunity cost of moving from point A to point B is:

Question

Quizplus · Accepted Answer

The opportunity cost of moving from point A to point B is the number of cigars given up in exchange for producing one additional car. From A to B, the economy produces 10 more cars but gives up 50 cigars (from 25 to 5). Therefore, the opportunity cost of producing one additional car is 5 cigars (50 cigars/10 cars).

Consider the Production Possibilities Frontier in the Figure Shown