Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of a bushel of apples is:
A) 3/20 watermelons.
B) 1/20 watermelons.
C) 1/40 watermelons.
D) 1/30 watermelons.

Question

Consider the production possibilities frontier displayed in the figure shown. The opportunity cost of a bushel of apples is:
A) 3/20 watermelons. 
B) 1/20 watermelons. 
C) 1/40 watermelons. 
D) 1/30 watermelons.

Quizplus · Accepted Answer

The opportunity cost of a bushel of apples is the amount of watermelons that must be given up to produce one additional bushel of apples. From point A to point B, 1/20 (or 0.05) watermelons must be given up to produce an additional bushel of apples. Therefore, the answer is B.

Consider the Production Possibilities Frontier Displayed in the Figure Shown