4. The opportunity cost of shifting production choices The following graph shows the production possibilities curve (PPC) of an economy that produces drinking water and coal. The black points (plus symbols) represent three possible output levels in a given month. You can click on the points to see their exact coordinates. 32 26 24 PPC 10 30 21 50 DRINKING WATER (Millions of gallons) 40 70 20 (?) Suppose the economy initially produces 30 million gallons of drinking water and 20 million tons of coal, which is represented by point A. The opportunity cost of producing an additional 10 million gallons of drinking water (that is, producing at point B rather than at point A) tons of coal. is Suppose, instead, that the economy currently produces 40 million gallons of drinking water and 16.8 million tons of coal, which is represented by point B. Now the opportunity cost of producing an additional 10 million gallons of drinking water (that is, producing at point C rather than at point B) is tons of coal. Comparing your answers in the previous questions suggests that the opportunity cost of producing 10 million additional gallons of drinking water at point B is the opportunity cost of producing 10 million additional gallons of drinking water at point A. This reflects the
4. The opportunity cost of shifting production choices The following graph shows the production possibilities curve (PPC) of an economy that produces drinking water and coal. The black points (plus symbols) represent three possible output levels in a given month. You can click on the points to see their exact coordinates. 32 26 24 PPC 10 30 21 50 DRINKING WATER (Millions of gallons) 40 70 20 (?) Suppose the economy initially produces 30 million gallons of drinking water and 20 million tons of coal, which is represented by point A. The opportunity cost of producing an additional 10 million gallons of drinking water (that is, producing at point B rather than at point A) tons of coal. is Suppose, instead, that the economy currently produces 40 million gallons of drinking water and 16.8 million tons of coal, which is represented by point B. Now the opportunity cost of producing an additional 10 million gallons of drinking water (that is, producing at point C rather than at point B) is tons of coal. Comparing your answers in the previous questions suggests that the opportunity cost of producing 10 million additional gallons of drinking water at point B is the opportunity cost of producing 10 million additional gallons of drinking water at point A. This reflects the
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Comparing your answers in the previous questions suggests that the opportunity cost of producing 10 million additional gallons of drinking water at point B is ________(choose between these: less than, greater than or equal to) .
and
the opportunity cost of producing 10 million additional gallons of drinking water at point A. This reflects the (choose between: notion that countries can
Transcribed Image Text:4. The opportunity cost of shifting production choices
The following graph shows the production possibilities curve (PPC) of an economy that produces drinking water and coal. The black
points (plus symbols) represent three possible output levels in a given month. You can click on the points to see their exact
coordinates.
COAL (Millions of tons)
26
24
PPC
10
21
50
DRINKING WATER (Millions of gallons)
30
40
70
(?)
Suppose the economy initially produces 30 million gallons of drinking water and 20 million tons of coal, which is represented by point A.
The opportunity cost of producing an additional 10 million gallons of drinking water (that is, producing at point B rather than at point A)
tons of coal.
is
Suppose, instead, that the economy currently produces 40 million gallons of drinking water and 16.8 million tons of coal, which is
represented by point B. Now the opportunity cost of producing an additional 10 million gallons of drinking water (that is, producing at
point C rather than at point B) is
▼tons of coal.
Comparing your answers in the previous questions suggests that the opportunity cost of producing 10 million additional gallons of
drinking water at point B is
the opportunity cost of producing 10 million additional gallons of drinking water at point A.
This reflects the
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