Question

Saved A nation can produce two products tanks and autos. The table below is the nation's production possibilities schedule. Product A E Production Possibilities B с D 1 2 3 950 850 650 Tanks 4 0 1,000 Autos 5 0 350 The total opportunity cost of three unit(s) of tanks is Multiple Choice 200 units of autos 350 units of autos О O 650 units of autos 1,000 units of autos

Answer 1

1) Opportunity cost is units foregone of next best alternative. If 3 units of tanks are produced, 650 autos can be produced in place of 3 tanks. Thus, opportunity cost of 3 tanks is 650 autos.

Option C is correct.

2) Income = $50

Maximum coke consumed = 20 which means if we spend all our money on coke, we will be able to consume 20 coke from $50 which means price per coke is $2.5

Maximum popcorn consumed = 10 which means if we spend all our money on popcorn, we will be able to consume 10 popcorn from $50 which means price per popcorn basket is $5

Option A is correct.