$$~~~~~~~~~~~~~~~~~~~~{ \text { United States } } ~~~~~ { \text { Australia } } \
\begin{array} { c c c c c }
\text { Possibility } & \text { Oil } & \text { Coal } & \text { Oil } & \text { Coal } \
\text { A } & 100 & 0 & 200 & 0 \
\text { B } & 50 & 25 & 100 & 20 \
\text { C } & 0 & 50 & 0 & 40
\end{array}$$
-The cost of an extra unit of oil in the United States in terms of coal given up is

Question

$$~~~~~~~~~~~~~~~~~~~~{ \text { United States } } ~~~~~  { \text { Australia } } \
\begin{array} { c c c c c } 
\text { Possibility } & \text { Oil } & \text { Coal } & \text { Oil } & \text { Coal } \
\text { A } & 100 & 0 & 200 & 0 \
\text { B } & 50 & 25 & 100 & 20 \
\text { C } & 0 & 50 & 0 & 40
\end{array}$$
-The cost of an extra unit of oil in the United States in terms of coal given up is

Quizplus · Accepted Answer

The cost of an extra unit of oil in terms of coal given up can be calculated using the opportunity cost concept. From possibility A to B, the United States goes from 100 to 50 units of oil, a decrease of 50 units of oil, to increase coal production from 0 to 25 units, an increase of 25 units. Thus, the cost of an extra unit of oil is 25 units of coal given up for 50 units of oil, or 25/50 = 1/2.

-The Cost of an Extra Unit of Oil in the \text