If an economy can produce a maximum of 10 units of good X and the opportunity cost of 1X is always 2Y,then what is the maximum units of good Y the economy can produce?
A)5
B)200
C)20
D)500
E)none of the above

Question

Quizplus · Accepted Answer

According to the given information, the opportunity cost of 1 unit of X is always 2Y. This means that to produce 1 unit of X, the economy has to give up the opportunity to produce 2 units of Y. Therefore, if the economy produces all of its maximum capacity of X (10 units), it has to give up the opportunity to produce 2Y for each X, which means it can produce a maximum of 20 units of Y. Hence, the maximum units of good Y the economy can produce is 20, which is Option C.

If an Economy Can Produce a Maximum of 10 Units