Suppose the economy initially produces 12 million gallons of drinking water and 500 million tons of coal, which is represented by point A. The opportunity cost of producing an additional 4 million gallons of drinking water (that is, moving production to point B) is tons of coal. Suppose, instead, that the economy currently produces 420 million tons of coal and 16 million gallons of drinking water, which is represented by point B. Now the opportunity cost of producing an additional 4 million gallons of drinking water (that is, moving to point C) is tons of coal. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 4 million additional gallons of drinking water at point B is the opportunity cost of 4 million additional gallons of drinking water at point A. This reflects the

Suppose the economy initially produces 12 million gallons of drinking water and 500 million tons of coal, which is represented by point A. The opportunity cost of producing an additional 4 million gallons of drinking water (that is, moving production to point B) is tons of coal. Suppose, instead, that the economy currently produces 420 million tons of coal and 16 million gallons of drinking water, which is represented by point B. Now the opportunity cost of producing an additional 4 million gallons of drinking water (that is, moving to point C) is tons of coal. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 4 million additional gallons of drinking water at point B is the opportunity cost of 4 million additional gallons of drinking water at point A. This reflects the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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