The following economy produces two products. Refer to the above table.The marginal opportunity cost of the fourth unit of tanks is:
A) 200.
B) 300.
C) 350.
D)650

Question

The following economy produces two products.  Refer to the above table.The marginal opportunity cost of the fourth unit of tanks is:
A) 200. 
B) 300. 
C) 350. 
D)650

Quizplus · Accepted Answer

The marginal opportunity cost of the fourth unit of tanks is calculated by finding the change in the quantity of planes produced when one more tank is produced. In this case, producing the fourth unit of tanks results in a decrease in the production of planes from 6 to 4, meaning that two fewer planes are produced. Therefore, the marginal opportunity cost of the fourth unit of tanks is 300 (the decrease in the production of planes) divided by 1 (the increase in the production of tanks). The best choice would be to produce 3 units of tanks and 6 units of planes, as this combination results in the lowest opportunity cost for both products.

The Following Economy Produces Two Products