The figure given below represents the PPC in two nations

Question

The figure given below represents the PPC in two nations - Germany and Korea, producing only two goods, cars and food.Figure 2.4
 
-When there is a choice between the consumption of bundle X and bundle Y, the opportunity cost of consuming bundle X is bundle Y.

Quizplus · Accepted Answer

This statement accurately describes the concept of opportunity cost, where the cost of choosing one option is the forgone benefits of the next best alternative. In the context of the PPC, the opportunity cost of producing more of one good is the reduction in production of the other good. Therefore, the opportunity cost of consuming bundle X (which may have more of one good than bundle Y) is the consumption of bundle Y (which may have more of the other good).