Question
Examine the Production Possibility Frontier schedule below showing the maximum output combinations of wool and computers for an economy and answer the question that follows.
Examine the Production Possibility Frontier schedule below showing the maximum output combinations of wool and computers for an economy and answer the question that follows.
Production Possibilities
ProductsABCDE
Wool ('000 bales)1009070400
Computers ('000)0100200300400
If the economy decides to increase wool production from 70,000 to 90,000 which of the following is correct?
a)the opportunity cost of each additional bale of wool is 0.5 computers.
b)the opportunity cost of each computer is 5 bales of wool.
c)the opportunity cost of each additional bale of wool is 0.2 of a computer.
d)the opportunity cost of each additional bale of wool is 5 computers.
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