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:

The opportunity cost of producing a pound of bananas is 2 pounds of apples.

Explanation:

At a point on the production possibilities frontier, 500 pounds of apples and 1,200 pounds of bananas are being produced.

When quantity of bananas is increased by 100 pounds from 1,200 to 1,300 pounds, the quantity of apples declined by 200 pounds, from 500 pounds to 300 pounds.

The opportunity cost of producing a pound of bananas

= $\frac{What\ is\ sacrificed}{What\ is\ gained}$

= $\frac{200}{100}$

= 2 pounds of apples