A country produces only apples and bananas.Moving from point A to point B along its production possibilities frontier,5 apples are gained and 4 bananas are forgone.What is the opportunity cost of an apple?
A) 4 bananas
B) 5/4 of a banana
C) 4/5 of a banana
D) 1 apple
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The opportunity cost of an apple is the forgone production of bananas. In this scenario, moving from point A to point B results in a gain of 5 apples and a loss of 4 bananas. Therefore, the opportunity cost of producing one apple is 4/5 of a banana, which is option C.

A Country Produces Only Apples and Bananas