Figure 3.3.1
-The economy is at point b on the PPF in Figure 3.3.1. The opportunity cost of producing one more unit of X is

Question

Figure 3.3.1 
-The economy is at point b on the PPF in Figure 3.3.1. The opportunity cost of producing one more unit of X is

Quizplus · Accepted Answer

The opportunity cost of producing one more unit of X is the amount of Y that must be given up to produce that additional unit of X. This is determined by the slope of the production possibilities frontier (PPF) at point b. Since the PPF typically slopes downwards, producing more of X means less of Y can be produced, hence the correct answer involves units of Y, not X.

Figure 3.3.1 -The Economy Is at Point B on the PPF in the PPF