1 answer

Good Y 80 50 B 40 20 0 2 4 6 8 10 Good X Figure...

Question:

Good Y 80 50 B 40 20 0 2 4 6 8 10 Good X Figure 2.1.2 5) Refer to the production possibilities frontier in Figure 2.1.2. At p
Good Y 80 50 B 40 20 0 2 4 6 8 10 Good X Figure 2.1.2 5) Refer to the production possibilities frontier in Figure 2.1.2. At point A, the opportunity cost of producing 3 more units of X A) is 30 units of Y. B) is 10 units of Y. C) is 3 units of X D) is 20 units of Y. E) cannot be determined from the diagram.

Answers

Production at point A: 3 units of Good X and 70 units of Good Y

Production at point B: 6 units of Good X and 50 units of Good Y

If the given economy/firm produces 3 additional units of Good X at point A, then the production point moves to point B.

At point B, only 50 units of Good Y can be produced using the remaining resources after producing 6 units of Good X.

Hence, in order to increase the production of Good X by 3 units, (70-50=) 20 units of Good Y must be foregone.

Therefore, the opportunity cost of producing 3 more units of Good X at point A is 20 units of Good Y

Ans: D) is 20 units of Good Y

.

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