Carlos can produce the following combinations of X and Y: 10X and 10Y,5X and 15Y,and 0X and 20Y.The opportunity cost of one unit of X for Carlos is
A) 1 unit of Y.
B) 2 units of Y.
C) 1/2 unit of Y.
D) 1/4 unit of Y.
E) none of the above

Question

Quizplus · Accepted Answer

The opportunity cost of one unit of X is the number of units of Y that Carlos must give up to produce one more unit of X. In this case, Carlos can produce 10X and 10Y, 5X and 15Y, or 0X and 20Y. To produce one more unit of X, Carlos must give up 1 unit of Y. Therefore, the opportunity cost of one unit of X is 1 unit of Y.

Carlos Can Produce the Following Combinations of X and Y