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Chapter 2: Q. 2.21 (page 47)

Suppose that in Fig 2-2, the nation currently is producing combination D in the table and on the graph of the production possibilities curve. What is the opportunity cost of producing 5 million more smartphones and moving to production combination C?

Short Answer

Expert verified

10 millions per year.

Step by step solution

01

Step1. Given information

Nation is producing at the combination D of the given PPC curve.

02

Step2. Explanation

For moving to C from D, i.e. increasing 5 millions smartphones per year, the identified opportunity cost as per the given Production Possibility Frontier (PPF) is letting go of 10 millions tablet devices (30 to 20 millions per year).

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