Question

Use the table below for this problem.

Production of Good H and Good G in Lochlea
Combination	Good H	Good G
A	0	30
B	4	28
C	8	24
D	12	18
E	16	10
F	20	0

Suppose Lochlea is producing at combination D and moves to combination C. What is the opportunity cost of this move?

Group of answer choices

A. 12 units of good H

B. 4 units of good H

C. 18 units of good G

D. 6 units of good G

Answer 1

At point D he is producing 12 units of H and 18 units of G and At point C he is producing 8 units of H and 24 units of G. Thus by moving from point D to point C he is getting 24 - 18 = 6 units of G and he is sacrificing 12 - 8 = 4 units of H. The value of this sacrificing is what will be the opportunity cost of moving from point D to point C.

Here, the value he sacrifices is 4 units of H. So opportunity cost of moving from point D to point C is 4 units of H.

Hence, the correct answer is (B) 4 units of good H.