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If the economy is producing 40 units of X and 600 units of Y, what is...

If the economy is producing 40 units of X and 600 units of Y, what is the opportunity cost of producing an extra 100 units of Y.

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Answer #1

The opportunity cost is the number of units sacrificed of a good in order to produce an additional unit of the other good.

It is given that the economy is producing 40 units of X and 600 units of Y. In order to produce 1 extra unit of Y, the economy has to sacrifice the production of 40/600 = 1/15 units of X. So, in order to produce 100 extra units of Y, (1/15)(100) = 6.67 units of X are needed to be sacrificed. So, the opportunity cost of producing 100 extra units of Y are 6.67 units of X.

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