Answer to Question #235080 in Microeconomics for rani

Question

1. The production possibilities curve below show the hypothetical relationship between the production of food and clothing in an economy.

Combination Food Clothing

A 0 4

B 7 3

C 13 2

D 18 1

E 22 0

(a) What is the marginal opportunity cost of producing the second unit of clothing?

(b) What is the total opportunity cost of producing the second unit of clothing?

(c) What is the marginal opportunity cost of producing the third unit of clothing?

(d) What is the total opportunity cost of producing the third unit of clothing?

Answer 1

Marginal opportunity cost: MOC

Marginal opportunity cost is defined as the rate at which the production/consumption of one good is sacrificed for every additional unit of consumption/production of another good.

Marginal opportunity cost= loss of good A$\div$

gain of good B

Total opportunity cost: TOC

Total opportunity cost is defined as the total loss of consumption/ production of a good by consuming/producing other good.

Total opportunity cost= ∑_{loss of good}

Answers:

a) The marginal opportunity cost of producing the second unit of clothing= 0.14

b)The total opportunity cost of producing the second unit of clothing= 1

c)The marginal opportunity cost of producing the third unit of clothing= 0.16

d)The total opportunity cost of producing the third unit of clothing= 2