Table 3-14
The following table contains some production possibilities for an economy for a given year. $$\begin{array} { | c | c | }
\hline \text { Cart } & \text { NEindPipert } \
\hline 10 & 400 \
\hline 12 & 360 \
\hline 14 & ? \
\hline
\end{array}$$
-Refer to Table 3-14. If the production possibilities frontier is a straight line, then "?" must be
A) 340.
B) 330.
C) 320.
D) 310.

Question

Table 3-14
The following table contains some production possibilities for an economy for a given year. $$\begin{array} { | c | c | } 
\hline \text { Cart } & \text { NEindPipert } \
\hline 10 & 400 \
\hline 12 & 360 \
\hline 14 & ? \
\hline
\end{array}$$
-Refer to Table 3-14. If the production possibilities frontier is a straight line, then "?" must be
A) 340.
B) 330.
C) 320.
D) 310.

Quizplus · Accepted Answer

If the production possibilities frontier is a straight line, then it must have a constant slope, meaning that the opportunity cost of producing one unit of Cart is constant regardless of the level of production. To find the missing value, we need to consider the tradeoff between producing Carts and NEindPiperts. Between the first and second production points, the economy produced 2 more carts but gave up 40 NEindPiperts (400 - 360). This means that the opportunity cost of producing each Cart was 20 NEindPiperts (40/2). We can use this opportunity cost to determine the missing value. To produce 14 Carts, the economy would have to give up 280 NEindPiperts (14 x 20). Therefore, the missing value is 320 (400 - 280). The answer is (C).

Table 3-14 the Following Table Contains Some Production Possibilities for an Economy

Table 3-14
the Following Table Contains Some Production Possibilities for an Economy