Question

55 Community ne economy represented in the following Figure is presently producing 12 units of Good and perso mits of Good A: Production Policies Care2 GOODS 1. What is the opportunity cost of increasing production of Good from 2. What is the opportunity cost of increasing production of Good from 3. This is an example of constant increasing decreasing/ portr 4. This is an example of constant/ncreasing decreasing report 2

Answer 1

1. Ecenumy is producing 12 units of and with o gere unt of Good A. and to increase the production of God A want from zero unit to une unit, economy has to decrease the con production of God 8 from 12 units to tounds. Hence, opportunity cost of increasing production of Gred A from zero wit to one unit is a units of and B (1.6, 12-102 Economy is predning 10 units of God B with unit of Good A. To increase the production of Good A from I und do 2 units, economy has to decrease the production of God B from lo units to t 6 units Sonce, opportunity cast of increasing production of tim I mit to 2 unity is 4 units of Gode Good A. (l..., 10-6) 3. This is an example of increasing opportunity curt pero unit of god A. As we have seen in earher two parts , the oppertonity cest of producing God A is increasing from 2 ento of Good B to 4 unit of Good B, as we increase the production of God A from beint zero unid to une unit and une mit to two wit. 4 This is an example of increasing unit of Good B as well opportunity cost per Marke: Concave Ppt represent increasing opportunity cust.