NARRBEGIN: Exhibit 11-1
Exhibit 11-1

-In Exhibit 11-1, opportunity cost at equilibrium equals

Question

NARRBEGIN: Exhibit 11-1
Exhibit 11-1
 
-In Exhibit 11-1, opportunity cost at equilibrium equals

Quizplus · Accepted Answer

Opportunity cost at equilibrium is equal to the slope of the production possibility frontier (PPF). In the exhibit, the slope of the PPF is -1/2, which means that the opportunity cost is 2 units of Good X for every unit of Good Y. At equilibrium, the price ratio (PX/PY) is also equal to 2. Therefore, the opportunity cost at equilibrium is $80, which is the answer choice B.

NARRBEGIN: Exhibit 11-1 Exhibit 11-1