An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X. Furthermore, the opportunity cost between the two goods is always constant.... An economy can produce either of these two combinations of goods X and Y: 1,000X and 0Y or 400Y and 0X. Furthermore, the opportunity cost between the two goods is always constant. Which of the following combinations of the two goods, X and Y, is it possible for the economy to produce? a. 700 units of X and 280 units of Y b. 400 units of X and 150 units of Y c. 600 units of X and 250 units of Y d. 300 units of X and 280 units of Y
Understand the Problem
The question is asking which combination of goods X and Y the economy can produce given the constant opportunity cost between the two goods and the specified production limits. We will need to analyze the combinations provided and compare them against the production possibilities defined in the question.
Answer
400 units of X and 150 units of Y
The final answer is 400 units of X and 150 units of Y
Answer for screen readers
The final answer is 400 units of X and 150 units of Y
More Information
The economy can produce the given combination when points lie on the production possibilities frontier. This means that considering the constant opportunity cost, a linear function can describe the trade-off between X and Y.
Tips
A common mistake is to assume that all combinations within the extremes can be produced without maintaining the linear relationship of opportunity cost.
Sources
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