What is the opportunity cost, in terms of sweaters, when going from producing combination B to...

What is the opportunity cost, in terms of sweaters, when going from producing combination B to combination C in computers?

Expert Solution

The production possibility combinations are given as follows

We can use the above table to determine the opportunity cost of computers when we shift from combination B and C.

The increase in output of computer is 2 and the output of Sweaters decreases by 6 units (= 48 - 42).

2 units of Computers = 6 unit of Sweaters

1 unit of Computer = 3 unit of Sweaters.

Or, 1 Sweater = 1/3 unit of Computer.

I have used an example to explain how to calculate the opportunity cost. This is just for reference.

Rahul Sunny answered 2 years ago

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