Suppose the economy initially produces 9,000 pieces of clothing and 500 million barrels of oil, which is represented by point A. The opportunity cost of producing an additional 3,000 pieces of clothing (that is, moving production to point B) is __________ (options: 60 million, 80 million, 100 million, 120 million, 150 million) barrels of oil. Suppose, instead, that the economy currently produces 420 million barrels of oil and 12,000 pieces of clothing, which is represented by point B. Now the opportunity cost of producing an additional 3,000 pieces of clothing (that is, moving to point C) is ________ (options: 60 million, 80 million, 100 million, 120 million, 150 million) barrels of oil. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 3,000 additional pieces of clothing at point B is ________ (opptions: greater than, equal to, less than) the opportunity cost of 3,000 additional pieces of clothing at point A. This reflects the ______ (options: principle of increasing costs, fact that resources are scarce, notion that countries can gain from trade).
Suppose the economy initially produces 9,000 pieces of clothing and 500 million barrels of oil, which is represented by point A. The opportunity cost of producing an additional 3,000 pieces of clothing (that is, moving production to point B) is __________ (options: 60 million, 80 million, 100 million, 120 million, 150 million) barrels of oil. Suppose, instead, that the economy currently produces 420 million barrels of oil and 12,000 pieces of clothing, which is represented by point B. Now the opportunity cost of producing an additional 3,000 pieces of clothing (that is, moving to point C) is ________ (options: 60 million, 80 million, 100 million, 120 million, 150 million) barrels of oil. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 3,000 additional pieces of clothing at point B is ________ (opptions: greater than, equal to, less than) the opportunity cost of 3,000 additional pieces of clothing at point A. This reflects the ______ (options: principle of increasing costs, fact that resources are scarce, notion that countries can gain from trade).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Suppose the economy initially produces 9,000 pieces of clothing and 500 million barrels of oil, which is represented by point A. The opportunity cost of producing an additional 3,000 pieces of clothing (that is, moving production to point B) is __________ (options: 60 million, 80 million, 100 million, 120 million, 150 million) barrels of oil.
Suppose, instead, that the economy currently produces 420 million barrels of oil and 12,000 pieces of clothing, which is represented by point B. Now the opportunity cost of producing an additional 3,000 pieces of clothing (that is, moving to point C) is ________ (options: 60 million, 80 million, 100 million, 120 million, 150 million) barrels of oil.
Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 3,000 additional pieces of clothing at point B is ________ (opptions: greater than, equal to, less than) the opportunity cost of 3,000 additional pieces of clothing at point A. This reflects the ______ (options: principle of increasing costs, fact that resources are scarce, notion that countries can gain from trade ).
Transcribed Image Text:The following graph shows the production possibilities frontier (PPF) of an economy that produces clothing and oil. The black points (plus symbols)
represent three possible output levels in a given month. You can select the points to see their exact coordinates.
24
21
PPF
18
15
B
12
9
6
100
200
300
400
500
600
700
800
OIL (Millions of barrels)
CLOTHING (Thousands of pieces)
Expert Solution
Step 1
A production possibility frontier (PPF) shows the maximum possible output combinations of two goods or services an economy can achieve when all resources are fully and efficiently employed.
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