Question
Suppose the economy initially produces 12,000 pounds of food and 500,000 barrels of oil, which is represented by point A. The opportunity cost of producing
Suppose the economy initially produces 12,000 pounds of food and 500,000 barrels of oil, which is represented by point A. The opportunity cost of producing an additional 4,000 pounds of food (that is, moving production to point B) is barrels of oil.
Suppose, instead, that the economy currently produces 420,000 barrels of oil and 16,000 pounds of food, which is represented by point B. Now the opportunity cost of producing an additional 4,000 pounds of food (that is, moving to point C) is barrels of oil.
Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 4,000 additional pounds of food at point B is the opportunity cost of 4,000 additional pounds of food at point A. This reflects the .
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