Figure 3-23
The graph below represents the various combinations of ham and cheese (in pounds)that the nation of Bonovia could produce in a given month.
-Refer to Figure 3-23.For Bonovia,what is the opportunity cost of a pound of cheese?
A)0.8 pounds of ham
B)1.25 pounds of ham
C)8 pounds of ham
D)16 pounds of ham

Question

Figure 3-23
The graph below represents the various combinations of ham and cheese (in pounds)that the nation of Bonovia could produce in a given month. 
-Refer to Figure 3-23.For Bonovia,what is the opportunity cost of a pound of cheese?
A)0.8 pounds of ham 
B)1.25 pounds of ham 
C)8 pounds of ham 
D)16 pounds of ham

Quizplus · Accepted Answer

To find the opportunity cost of a pound of cheese, we need to look at the slope of the production possibilities curve (PPC). The slope of the PPC represents the amount of one good that must be given up to produce more of the other good. In this case, the slope of the PPC is (-10)/8, which simplifies to -1.25. This means that for each pound of cheese produced, Bonovia must give up 1.25 pounds of ham. Therefore, the opportunity cost of a pound of cheese is 1.25 pounds of ham.

The best choice(s) depend on the specific needs and wants of Bonovia. If the country values cheese more than ham, they should produce more cheese and give up some ham. Similarly, if they value ham more than cheese, they should produce more ham and give up some cheese. The optimal production point depends on the relative value of cheese and ham to the country.

Figure 3-23 the Graph Below Represents the Various Combinations of Ham and Ham