Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.

-Refer to Table 3-7.Suppose Korea decides to increase its production of cars by 18.What is the opportunity cost of this decision?
A) 3 airplanes
B) 6 airplanes
C) 16 airplanes
D) 150 airplanes

Question

Table 3-7
Assume that Japan and Korea can switch between producing cars and producing airplanes at a constant rate.
 
-Refer to Table 3-7.Suppose Korea decides to increase its production of cars by 18.What is the opportunity cost of this decision?
A) 3 airplanes 
B) 6 airplanes 
C) 16 airplanes 
D) 150 airplanes

Quizplus · Accepted Answer

From the table, we can see that Korea can produce either 9 cars or 3 airplanes. If Korea decides to increase its production of cars by 18, it will have to give up producing 6 airplanes (18/3). Therefore, the opportunity cost of this decision is 6 airplanes, which is option B.

Table 3-7 Assume That Japan and Korea Can Switch Between Producing Cars