The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy. Refer to the above table.What is the opportunity cost of producing the fourth unit of capital goods?
A)6 units of consumer goods
B)7 units of consumer goods
C)15 units of consumer goods
D)22 units of consumer goods

Question

The production possibilities curve below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.  Refer to the above table.What is the opportunity cost of producing the fourth unit of capital goods?
A)6 units of consumer goods 
B)7 units of consumer goods 
C)15 units of consumer goods 
D)22 units of consumer goods

Quizplus · Accepted Answer

To produce the fourth unit of capital goods, the economy has to give up producing 7 units of consumer goods. This is because the opportunity cost of producing one more unit of capital goods is the amount of consumer goods that have to be given up.

The Production Possibilities Curve Below Shows the Hypothetical Relationship Between