The opportunity cost in terms of toothbrushes of getting 10 additional toasters by moving from point B to point A is

Question

BlackTom AI · Accepted Answer

To tackle this question, start by understanding the concept: opportunity cost is what you must give up of one good to obtain more of another when moving along a production possibilities frontier.
Option 1: zero, since the economy has the additional resources to produce 10 additional toasters. This is incorrect because even with more resources, producing more of one good (toasters) requires sacrificing some quantity of the other good (toothbrushes) if resources are currently allocated on the frontier. The trade-off is the essence of the opportunity cost, not a zero cost.
Option 2: 10 toothbrushes. If the trade-off were 1 toothbrush per toaster (a 1:1 rate), moving from B to A to gain 10 toasters would cost 10 toothbrushes. But the actual slope of the frontier determines the exact rate. Without that slope specified here, assuming 1:1 is unwarranted.
Option 3: 5 toothbrushes. A cost of 5 toothbrushes for 10 toasters would imply a rate of 0.5 toothbrushes per toaster. This would be a relatively favorable trade for toothbrushes, suggesting a much flatter frontier than typical. It does not align with the implied production possibility trade-off in the question.
Option 4: 20 toothbrushes. This option represents a rate of 2 toothbrushes per toaster (since 10 toasters cost 20 toothbrushes). If moving from B to A increases toaster production by 10 while reducing toothbrush production by 20, the opportunity cost is exactly 20 toothbrushes forgone for 10 additional toasters. This aligns with a steeper opportunity cost on the frontier and is consistent with the standard interpretation of moving along a PPF.
In summary, the crucial idea is the trade-off rate between the two goods as you reallocate resources. The only option that matches a 2 toothbrushes per toaster trade-off (20 toothbrushes for 10 more toasters) is option 4, while the others fail to reflect the correct opportunity-cost ratio.

2254 ECON 0110 SEC1300 Test 1

The opportunity cost in terms of toothbrushes of getting 10 additional toasters by moving from point B to point A is

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2254 ECON 0110 SEC1300 Test 1

The opportunity cost in terms of toothbrushes of getting 10 additional toasters by moving from point B to point A is

View Explanation

Log in for full answers

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