Figure 1-7 shows the production possibilities boundary for an economy that produces two goods - cotton and bananas. FIGURE 1-7
-Refer to Figure 1-7.A production possibilities boundary is shown for an economy that produces two goods - cotton and bananas,both measured in tonnes produced per year.Suppose the economy is currently producing at point A.What is the opportunity cost to this economy of increasing production of bananas by 100 tonnes?
A)there is no opportunity cost
B)60 tonnes of cotton
C)100 tonnes of cotton
D)1440 tonnes of bananas
E)1500 tonnes of bananas

Question

Figure 1-7 shows the production possibilities boundary for an economy that produces two goods - cotton and bananas.  FIGURE 1-7
-Refer to Figure 1-7.A production possibilities boundary is shown for an economy that produces two goods - cotton and bananas,both measured in tonnes produced per year.Suppose the economy is currently producing at point A.What is the opportunity cost to this economy of increasing production of bananas by 100 tonnes?
A)there is no opportunity cost 
B)60 tonnes of cotton 
C)100 tonnes of cotton 
D)1440 tonnes of bananas 
E)1500 tonnes of bananas

Quizplus · Accepted Answer

The opportunity cost of increasing banana production by 100 tonnes is the amount of cotton that must be given up, which is 60 tonnes according to the production possibilities boundary.

Figure 1-7 Shows the Production Possibilities Boundary for an Economy