Question

A production possibilities table for DVDS and computers is shown below. 

Production Altematives

Type of Production	A	B	C	D	E
Computers	0	20	40	60	80
DVDs	80	70	55	35	0

Instructions: Enter your answers as absolute and whole numbers. 

a. What is the opportunity cost of computers when moving from point A to point B? DVDS 

b. What is the opportunity cost of computers when moving from point B to point C? DVDS 

c. What is the opportunity cost of computers when moving from point C to point D? DVDS 

d. What is the opportunity cost of computers when moving from point D to point E? DVDS 

e. As we produce more computers, opportunity costs are increasing

Answer 1

(a) The opportunity cost of moving from point A to point B (20 additional computers)=(80-70)= 10 DVDs.

(b) The opportunity cost of moving from point B to point C= (70-55)= 15 DVDs.

(c) The opportunity cost of moving from point C to point D = (55-35)= 20 DVDs.

(d) The opportunity cost of moving from point D to point E= (35-0)=35 DVDs.

(e) As we produce more computers, opportunity costs are increasing.

Answer 2

A - opportunity cost = 10/20

= 0.5

B - opportunity cost = 15/20

= 0.75

C - Opportunity cost = 20/20

= 1

D - Opportunity cost = 35/20

= 1.75

E - As we keep on increasing the production of computers , the opportunity cost keeps on increasing .