Figure 3-2
Peru's Production Possibilities Frontier

-Refer to Figure 3-2.Suppose Peru decides to increase its production of emeralds by 2.What is the opportunity cost of this decision?
A) 30 rubies
B) 40 rubies
C) 60 rubies
D) 120 rubies

Question

Figure 3-2
Peru's Production Possibilities Frontier
 
-Refer to Figure 3-2.Suppose Peru decides to increase its production of emeralds by 2.What is the opportunity cost of this decision?
A) 30 rubies 
B) 40 rubies 
C) 60 rubies 
D) 120 rubies

Quizplus · Accepted Answer

According to the production possibilities frontier in Figure 3-2, if Peru decides to increase its production of emeralds by 2, it would have to decrease its production of rubies by 60 (moving from point A to B on the frontier). Therefore, 60 rubies is the opportunity cost of this decision.

Figure 3-2 Peru's Production Possibilities Frontier