What is the opportunity cost of tractors when moving from point A to point C on the PPF?
Understand the Problem
The question presents a Production Possibility Curve (PPC) and asks to determine the opportunity cost of tractors when moving production from point A to point C on the curve. The opportunity cost refers to the quantity of tractors that must be given up in order to produce more shoes when shifting from point A to point C.
Answer
The opportunity cost of tractors when moving from point A to point C is 30.
The opportunity cost of tractors when moving from point A to point C on the PPF is 30. The opportunity cost is calculated by the difference in the quantity of tractors produced at point A (50) and point C (20), which equals 30.
Answer for screen readers
The opportunity cost of tractors when moving from point A to point C on the PPF is 30. The opportunity cost is calculated by the difference in the quantity of tractors produced at point A (50) and point C (20), which equals 30.
More Information
The Production Possibilities Frontier (PPF) is a curve depicting all maximum output possibilities for two or more goods given a set of inputs (resources, labor, etc.). The PPF assumes that all inputs are used efficiently.
Tips
A common mistake is to calculate the opportunity cost of shoes instead of tractors.
Sources
- The Production Possibilities Frontier (article) - Khan Academy - khanacademy.org
- Opportunity cost & the production possibilities curve (PPC) (article) - khanacademy.org
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