Asked by Trevor Dandrade on May 28, 2024
Verified
On a production possibility frontier,opportunity cost is:
A) the decrease in the output of one good when the output of the other good is increased.
B) the rate at which people are willing to exchange goods as determined by demand and supply.
C) the dollar cost of the good given up to get another good.
D) independent of the slope of the curve.
Opportunity Cost
The cost of the next best alternative foregone when a decision is made.
Production Possibility Frontier
A curve depicting the limit of attainable outputs for two or more products given a fixed set of resources, showing the trade-offs in production choices.
Output
The total amount of goods or services produced by a company, sector, or economy in a given period.
- Apprehend the concept of opportunity cost with respect to different trade-offs and its calculation across various scenarios.
Verified Answer
MF
Marcelle FernandezMay 31, 2024
Final Answer :
A
Explanation :
Opportunity cost refers to the potential cost of giving up one option to pursue another. On a production possibility frontier, it is the decrease in the output of one good when the output of the other good is increased. This means that as more resources are allocated to producing one good, the opportunity cost of producing additional units of that good increases because resources must be taken away from producing the other good.
Learning Objectives
- Apprehend the concept of opportunity cost with respect to different trade-offs and its calculation across various scenarios.