Visualize a straight down-slope PPF (Production Possibility Frontier/Curve) for two countries the United States and Taiwan. Both countries produce YO-YOs and Tennis Shoes. The PPF for the United States shows that on the Y-Axis its Output for YO-YOs is 100 million (per year) and X-Axis its Output for Tennis Shoes is 25 million (per year). The PPF for Taiwan shows that on the Y-Axis its Output for YO-YOs is 20 million (per year) and X-Axis its Output for Tennis Shoes is 10 million (per year). Considering the PPFs for both countries, the opportunity cost of producing 1 YO-YO in Taiwan is: Answers: A. 2 pairs of tennis shoes. B. One-half of a yo-yo. C. Greater than the opportunity cost in the United States. D. Equal to the opportunity cost of producing 1 yo-yo in the U.S.
Visualize a straight down-slope PPF (
The PPF for the United States shows that on the Y-Axis its Output for YO-YOs is 100 million (per year) and X-Axis its Output for Tennis Shoes is 25 million (per year).
The PPF for Taiwan shows that on the Y-Axis its Output for YO-YOs is 20 million (per year) and X-Axis its Output for Tennis Shoes is 10 million (per year).
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Considering the PPFs for both countries, the |
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Opportunity cost is the forgone gain derived from the alternate option that is not chosen.
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