Question

On a production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas can be produced while at another point on the same frontier, 300 pounds of apples and 1,300 pounds of bananas can be produced. Between these points, what is the opportunity cost of producing a pound of bananas?

Answer 1

Answer:

opportunity cost of producing bananas = 2 pounds of apples per pound of bananas

Explanation:

production possibilities frontier (in pounds):

Apples      Bananas

500            1,200

300            1,300

between the two points the production of bananas increases by 100 pounds, while the production of apples decreases by 200 pounds, so the opportunity cost of production bananas instead of apples = 200 pounds / 100 pounds = 2 pounds of apple per pound of bananas