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The equation for a production possibility frontier with good y on the vertical axis and good...

The equation for a production possibility frontier with good y on the vertical axis and good x on the horizontal axis is y = 10 – x. Determine the opportunity cost of producing one more unit of good x.

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Answer #1

Production Possibility curve basically represents the combination of two goods that can be produced with given level of resources . A production possibility frontier shows how much an economy can produce given existing resources.A production possibility can show the different choices that an economy faces.

Opportunity cost basically in simple terms represents the next best alternative , so in other terms it represents the how much we have to forgone one good to gain the other good .

So if Y = 10 - x ,

Now , if X = 1 , Y = 9

If we increase X =2 , Y = 8 .

This means that to gain extra unit of X , we have forgive 1 unit of Y . Hence Opportunity cost = 1 in this case .

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