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Figure: Sugar and Freight Trains
-(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:
A)19 tons of sugar.
B)45 tons of sugar.
C)80 tons of sugar.
D)3 freight trains.

Question

Use the following to answer questions :
Figure: Sugar and Freight Trains 
-(Figure: Sugar and Freight Trains) Look at the figure Sugar and Freight Trains. Suppose the economy is operating at point C. The opportunity cost of producing the fourth freight train would be:
A)19 tons of sugar. 
B)45 tons of sugar. 
C)80 tons of sugar. 
D)3 freight trains.

Quizplus · Accepted Answer

At point C, the economy is producing 4 freight trains and 20 tons of sugar. To produce an additional unit of freight train, the opportunity cost would be the amount of sugar that needs to be given up. Moving from point C to point D, 20 tons of sugar needs to be given up to produce 5 freight trains. Therefore, to produce one more freight train, the opportunity cost of 20 tons of sugar would be incurred. Moving from point C to point E, 100 tons of sugar needs to be given up to produce 5 freight trains. Therefore, to produce one more freight train, the opportunity cost of 80 tons of sugar would be incurred. Hence, the answer is C, 80 tons of sugar.

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