Below is a production possibilities curve involving tea and videos.

-Refer to the graph above to answer this question.Assume that the economy is facing PPI and that the economy is currently producing the combination of tea and videos represented by point A What is the opportunity cost of increasing the output of videos to 400,000?

A)400 tons of tea.
B)800 tons of tea.
C)100,000 videos.
D)300,000 videos.

Question

Below is a production possibilities curve involving tea and videos.
 
-Refer to the graph above to answer this question.Assume that the economy is facing PPI and that the economy is currently producing the combination of tea and videos represented by point A What is the opportunity cost of increasing the output of videos to 400,000?

A)400 tons of tea. 
B)800 tons of tea. 
C)100,000 videos. 
D)300,000 videos.

Quizplus · Accepted Answer

The opportunity cost of increasing the output of videos to 400,000 is the amount of tea that must be given up to produce the additional videos. Moving from point A to point B on the graph shows that the economy must give up 400 tons of tea to produce an additional 100,000 videos. Therefore, the opportunity cost of increasing the output of videos to 400,000 is 400 tons of tea.

Below Is a Production Possibilities Curve Involving Tea and Videos