This graph describes the production possibilities on the island of Genovia:
The opportunity cost of producing one ton of agricultural products in Genovia is:
A)1,000 cars.
B)1 car.
C)1/5 of a car.
D)1/50 of a car.

Question

This graph describes the production possibilities on the island of Genovia: 
The opportunity cost of producing one ton of agricultural products in Genovia is:
A)1,000 cars. 
B)1 car. 
C)1/5 of a car. 
D)1/50 of a car.

Quizplus · Accepted Answer

The opportunity cost of any good equals what you must give up of the other good divided by what you gain.This country could give up 1,000 cars to gain 50,000 tons of agricultural products.1,000/50,000 = 1/50.For linear production possibility curves,the axis intercepts can be used to calculate opportunity cost.

This Graph Describes the Production Possibilities on the Island of Genovia