Answer to Question #163326 in Microeconomics for Cold

Question

Assume that a certain simplified economy produces only two goods, X and Y, with given resources and technology. The following table gives the various possible combinations of the production of the two goods (all units are measured in millions of tons).

Production Possibility

Good X

Good Y

Opportunity Cost of 

Good X

A

100

B

2

90

C

4

60

D

6

20

Calculate the opportunity cost of the production of good X at

   each point. (2 points)

Answer 1

Answer to Task#163326

At point B the opportunity cost will be;

$=(90-100)/(2-0)=(-10)/2=-5$

At point C the opportunity cost will be;

$=(60-90)/(4-2)=-30/2=-15$

At point D the opportunity cost will be;

$=(20-60)/(6-4)=(-40)/2=-20$