When operating on its PPF, a country can produce two tonnes of butter and 200 cars OR three tonnes of butter and 150 cars. The opportunity cost of one tonne of butter is cars per tonne of butter.
A) 300
B) 0.75
C) 50
D) 200

Question

Quizplus · Accepted Answer

The opportunity cost of moving from two tonnes of butter to three tonnes of butter is the reduction in car production from 200 to 150 cars, which is 50 cars. This means the opportunity cost of producing an additional tonne of butter is 50 cars.

When Operating on Its PPF, a Country Can Produce Two