Use the following to answer question(s):
Exhibit: Guns and Butter

-(Exhibit: Guns and Butter) If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:
A) indicates you can have more butter and guns simultaneously.
B) makes it clear that this economy experiences decreasing opportunity costs.
C) involves a loss of 8 units of guns per period.
D) involves a loss of 4 units of guns per period.

Question

Use the following to answer question(s): 
Exhibit: Guns and Butter
 
-(Exhibit: Guns and Butter) If the economy were operating at point B, producing 16 units of guns and 12 units of butter per period, a decision to move to point E and produce 18 units of butter:
A) indicates you can have more butter and guns simultaneously. 
B) makes it clear that this economy experiences decreasing opportunity costs. 
C) involves a loss of 8 units of guns per period. 
D) involves a loss of 4 units of guns per period.

Quizplus · Accepted Answer

Moving from point B to point E to produce more butter involves a trade-off where the production of guns decreases, indicating an opportunity cost. The specific loss of 8 units of guns to increase butter production by 6 units (from 12 to 18) is consistent with the concept of opportunity cost in economics, where increasing the production of one good results in the reduction of another due to limited resources. Choices A and B are incorrect because they misinterpret the trade-offs and opportunity costs involved. Choice D inaccurately quantifies the trade-off.

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