Question

If Farmer Sam MacDonald can produce 200 pounds of cabbages and 0 pounds of potatoes or 0 pounds of cabbages and 100 pounds of potatoes and faces a linear production possibilities curve for his farm, the opportunity cost of producing an additional pound of potatoes is _____ _ pound(s) of cabbage.

Answer 1

2

Explanation:

Opportunity cost is the benefit given up for choosing something else. Since the relationship is linear, 200 pounds of cabbage is to 100 pounds of potatoes the the relationship is 2 : to 1 that is 2 pounds of cabbage to 1 pound of potatoes. The opportunity cost of producing additional pound of potatoes is 2 pounds of cabbage.