Suppose a production possibilities frontier can be expressed as what is the opportunity cost of going from 1 unit of X to 2 units of X (in terms of units of Y) ?

Question

Business

Koen Wall

6 February, 03:49

Suppose a production possibilities frontier can be expressed as what is the opportunity cost of going from 1 unit of X to 2 units of X (in terms of units of Y) ?

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Answers (1)

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Dominick Dudley · Answer 1

Yes. A production possibility frontier can be expressed for this scenario.

Explanation:

A production possibility frontier tells the combinations of X and Y that can be produced with the given level of resources e. g. If 1 unit of X is produced than at the same time the Country can produce 50 units of Y. If 2 units of X are produced than at the same time the Country can produce 40 units of Y. This means that in order to produce 1 additional unit of X, the Country must forego 10 units of Y. This is the opportunity cost of going from 1 unit of X to 2 units of X (in terms of units of Y).