Question

Use the table below for this problem. Production of Good H and Good G in Lochlea...

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

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Homework Answers

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.

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