Answer to Question #126799 in Microeconomics for Mpho

Question

Economy zee produces only two goods milk and bananas : bananas on (x-axis)

Explain scarcity, choice and opportunity cost with regard economy zee.

Answer 1

Scarcity means, that the economy can produce limited amounts of milk and bananas. There is a choice what good and how much milk and bananas to produce. The opportunity cost is a cost of producing of some amount of milk that we need to give up to produce some additional amount of bananas and vice versa.