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Figure: Production Possibility Frontier
-(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. If the economy is operating at point B, producing 16 cars and 12 computers per period, a decision to move to point E and produce 18 computers:
A)indicates that you can have more computers and more cars simultaneously.
B)makes it clear that this economy has decreasing opportunity costs.
C)entails a loss of 8 cars per period.
D)entails a loss of 4 cars per period.

Question

Use the following to answer questions :
Figure: Production Possibility Frontier 
-(Figure: Production Possibility Frontier) Look at the figure Production Possibilities Frontier. If the economy is operating at point B, producing 16 cars and 12 computers per period, a decision to move to point E and produce 18 computers:
A)indicates that you can have more computers and more cars simultaneously. 
B)makes it clear that this economy has decreasing opportunity costs. 
C)entails a loss of 8 cars per period. 
D)entails a loss of 4 cars per period.

Quizplus · Accepted Answer

Moving from point B to point E results in producing more computers but fewer cars, specifically a reduction from 16 cars to 8 cars, which is a loss of 8 cars per period.

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