Opportunity Costs Suppose the economy initially produces 27 million garments of
ID: 1093629 • Letter: O
Question
Opportunity Costs
Suppose the economy initially produces 27 million garments of clothing and 10000 tons of steel which is represented by point A. The opportunity costs of producing an additional 5,000 tons of steel (that is, moving production to point B) is ____ ( 2 million, 6, mil, 5, mil, 4, mil, 3 mil) garments of clothing
Suppose, instead, that the economy currently produces 15,000 tons of steel and 24 million garments of clothing which is represented by point B. Now, the opportunity costs of producing an additional 5,000 tons of steel (that is, moving production to point C) is ____ ( 4 million, 5 mil, 6 mil, 3 mil, 2 mil) garments of clothing.
Comparing your answers in the two previous paragraphy, you can see that the opportunity cost of 5,000 additional tons of steel at point B is _____(Less than, greater than, equal to) the opportunity cost of 5,000 additional tons of steel at point A. This reflects the _____(fact that recources are scarce, law of increasing opportunity costs, notion that countries can gain from trade)
The opportunity cost of shifting production choices The following graph shows the production possibilities curve (PPC) of an economy that produces clothing and steel. The black points (X symbols) represent three possible output levels in a given month. You can place your mouse over the points to see their exact coordinates.Explanation / Answer
Suppose the economy initially produces 27 million garments of clothing and 10000 tons of steel which is represented by point A. The opportunity costs of producing an additional 5,000 tons of steel (that is, moving production to point B) is 27 – 24 = 3 million garments of clothing
Suppose, instead, that the economy currently produces 15,000 tons of steel and 24 million garments of clothing which is represented by point B. Now, the opportunity costs of producing an additional 5,000 tons of steel (that is, moving production to point C) is 24 – 20 = 4 million garments of clothing.
Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 5,000 additional tons of steel at point B is more than the opportunity cost of 5,000 additional tons of steel at point A. This reflects the law of increasing opportunity costs.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.