Figure 2-1 shows the production possibilities curve of an economy that produces bread and wine. A movement from Point B to Point C:Figure 2-1
A)involves sacrificing bread in order to produce a greater quantity of wine.
B)involves sacrificing wine in order to produce a greater quantity of bread.
C)involves no sacrifice, as the opportunity cost of production is zero everywhere along the production possibilities curve.
D)will increase the level of unemployment in the economy.
E)will decrease the level of unemployment in the economy.

Question

Figure 2-1 shows the production possibilities curve of an economy that produces bread and wine. A movement from Point B to Point C:Figure 2-1 
A)involves sacrificing bread in order to produce a greater quantity of wine. 
B)involves sacrificing wine in order to produce a greater quantity of bread. 
C)involves no sacrifice, as the opportunity cost of production is zero everywhere along the production possibilities curve. 
D)will increase the level of unemployment in the economy. 
E)will decrease the level of unemployment in the economy.

Quizplus · Accepted Answer

Moving from Point B to Point C involves sacrificing some units of wine in order to produce more bread. This is because as we move along the production possibility curve, we need to reallocate resources (labor, land, capital) from wine production to bread production, which leads to a decrease in wine output and an increase in bread output. Therefore, there is an opportunity cost of producing more bread, which is the foregone output of wine.

Figure 2-1 Shows the Production Possibilities Curve of an Economy