Refer to the figure below. If this economy were currently operating at point D, then in order to make more movies:
A)the first productive resources to switch to making movies should be those with the lowest opportunity cost of making milk.
B)the first productive resources to switch to making movies should be those with the highest opportunity cost of making milk.
C)no productive resources would need to switch from making milk to movies because point D is already efficient.
D)no productive resources would need to switch from making milk to movies because each resource should continue to be used according to its comparative advantage.

Question

Refer to the figure below. If this economy were currently operating at point D, then in order to make more movies: 
A)the first productive resources to switch to making movies should be those with the lowest opportunity cost of making milk. 
B)the first productive resources to switch to making movies should be those with the highest opportunity cost of making milk. 
C)no productive resources would need to switch from making milk to movies because point D is already efficient. 
D)no productive resources would need to switch from making milk to movies because each resource should continue to be used according to its comparative advantage.

Quizplus · Accepted Answer

Point D represents an output combination where the economy is not producing at the maximum potential. To increase the production of movies, the resources currently being used in producing milk need to be reallocated to the production of movies. The productive resources that are relatively less efficient in producing milk (i.e., those with the highest opportunity cost of milk production) should be the first ones to switch to producing movies. This will result in a smaller reduction in the production of milk and a relatively larger increase in the production of movies. Therefore, the productive resources with the highest opportunity cost of making milk should be directed to the production of movies to produce more movies.

Refer to the Figure Below