Refer to the above figure. Which one of the following statements is TRUE with regard to the economy depicted in the graph?
A) Starting from point A, this economy does not incur any opportunity cost in producing more bread.
B) Starting from point A, this economy does not incur any opportunity cost in producing more wool.
C) In moving from point A to point B, the economy produces 30 additional bales of wool at an opportunity cost of 250 loaves of bread.
D) In moving from point A to point B, the economy is experiencing economic growth.

Question

Quizplus · Accepted Answer

Moving from point A to point B represents an increase in wool production of 30 bales, but it comes at an opportunity cost of 250 loaves of bread, indicating that resources are not equally efficient in producing both goods. Therefore, the economy incurs an opportunity cost when producing more wool, and option A and B are incorrect. Option D is incorrect because there is no information to suggest that the shift from A to B is due to economic growth.

Refer to the Above Figure