(The following economy produces two products. )
Production Possibilities Table

-Refer to the above table.In moving from possibility C to D,the cost of a unit of steel in terms of a unit of wheat is:
A) 10
B) 20
C) 25
D) 30

Question

(The following economy produces two products. )
Production Possibilities Table
 
-Refer to the above table.In moving from possibility C to D,the cost of a unit of steel in terms of a unit of wheat is:
A) 10 
B) 20 
C) 25 
D) 30

Quizplus · Accepted Answer

Moving from possibility C to D means producing 20 more units of steel and giving up 20 units of wheat. Therefore, the opportunity cost of a unit of steel is 20 units of wheat, making the cost of a unit of steel in terms of wheat 20/1=20.

(The Following Economy Produces Two Products. )