Question

Can you all show me an opportunity cost of shifting production choices model and example?

Can you all show me an opportunity cost of shifting production choices model and example?

Homework Answers

Answer #1

Each point on PPC shows a combination of output of rice and wheat which can be produced with the given resources and given technology. Moving along the PPC from left to the right shows how much of rice is to be sacrificed for producing an additional unit of wheat. Thus, when we move from B to C, 4 units of rice are to be sacrificed for producing 2 more units of wheat. Implying that 2 units of rice are to be sacrificed for producing one more unit of wheat (moving from B to C).

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