Suppose that a country is producing on its PPC at a point to the left of the tangency between the trade line and the PPC.At the production point,
A)the opportunity cost in production of the good on the horizontal axis is less than its trade price.
B)the opportunity cost in production of the good on the horizontal axis is more than its trade price.
C)the opportunity cost in production of the good on the vertical axis is less than its trade price.
D)the opportunity cost in production of the good on the horizontal axis may be either less than or more than its trade price.

Question

Quizplus · Accepted Answer

When producing to the left of the tangency point, the opportunity cost of the good on the horizontal axis is less than its trade price, indicating that the country can gain by reallocating resources to produce more of this good.

Suppose That a Country Is Producing on Its PPC at a Point