Suppose the economy initially produces 12,000 pieces of clothing and 250 million barrels of oil, which is represented by point A. The opportunity cost of producing an additional 4,000 pieces of clothing (that is, moving production to point B) is barrels of oil. Suppose, instead, that the economy currently produces 210 million barrels of oil and 16,000 pieces of clothing, which is represented by point B. Now the opportunity cost of producing an additional 4,000 pieces of clothing (that is, moving to point C) is barrels of oil. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 4,000 additional pieces of clothing at point B is the opportunity cost of 4,000 additional pieces of clothing at point A. This reflects the
Suppose the economy initially produces 12,000 pieces of clothing and 250 million barrels of oil, which is represented by point A. The opportunity cost of producing an additional 4,000 pieces of clothing (that is, moving production to point B) is barrels of oil. Suppose, instead, that the economy currently produces 210 million barrels of oil and 16,000 pieces of clothing, which is represented by point B. Now the opportunity cost of producing an additional 4,000 pieces of clothing (that is, moving to point C) is barrels of oil. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 4,000 additional pieces of clothing at point B is the opportunity cost of 4,000 additional pieces of clothing at point A. This reflects the
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter2: Thinking Like An Economist
Section: Chapter Questions
Problem 3PA
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