Question

a) Calculate the opportunity cost of the production of good X at each point. What law does the trend in those values exhibit? b) What changes are required fo​

Answer 1

The opportunity cost of the production of good X at each point are:

-5, -15, -20.

Opportunity cost

Opportunity cost at point B

Opportunity cost=90-100/2-0

Opportunity cost=-5

Opportunity cost=60-90/4-2

Opportunity cost=-15

Opportunity cost=20-60/6-4

Opportunity cost=-20

The law that the trend in those values exhibit are:

• Point D towards point  A indicate the  Law of increasing the opportunity cost.
• Point A towards point D indicate the law of  decreasing opportunity cost.

b. The changes required are:

• Technology advancement

• Total labor and capital increases

Therefore the opportunity cost of the production of good X at each point are:-5, -15, -20.

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