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Chapter 2: Problem 4

On a production possibilities curve, the opportunity cost of good \(X\) in terms of good \(Y\) is represented by a. the distance to the curve from the vertical axis. b. the distance to the curve from the horizontal axis. c. the movement along the curve. d. all of the above.

Short Answer

Expert verified
The correct answer is: \(c. the movement along the curve.\) This is because the opportunity cost of producing good \(X\) in terms of good \(Y\) is represented by the movement along the production possibilities curve, which illustrates the trade-off and the cost of giving up some units of good \(Y\) in order to produce more units of good \(X\), or vice versa. The slope of the curve indicates the opportunity cost.

Step by step solution

01

Option a

The distance to the curve from the vertical axis does not properly represent the opportunity cost of good X in terms of good Y. This distance simply represents the quantity of good Y produced, but it does not indicate the trade-off between the two goods.
02

Option b

The distance to the curve from the horizontal axis also does not properly represent the opportunity cost of good X in terms of good Y. Like option a, this distance merely reflects the quantity of good X produced and does not illustrate the trade-off between the two goods.
03

Option c

The movement along the curve represents the opportunity cost of producing good X in terms of good Y. This movement illustrates the trade-off and the cost of giving up some units of good Y in order to produce more units of good X, or vice versa. The slope of the curve indicates the opportunity cost.
04

Option d

Since option c is the correct answer, option d cannot be correct as it includes all the other options, which have been demonstrated to be incorrect. Therefore, the correct answer is: c. the movement along the curve.

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Most popular questions from this chapter

A nation can accelerate its economic growth by a. reducing the number of immigrants allowed into the country. b. adding to its stock of capital. c. printing more money. d. imposing tariffs and quotas on imported goods.

Using a production possibilities curve, unemployment is represented by a point located a. near the middle of the curve. b. at the top corner of the curve. c. at the bottom corner of the curve. d. outside the curve. e. inside the curve.

Along a production possibilities curve, an increase in the production of one good can be accomplished only by a. decreasing the production of another good. b. increasing the production of another good. c. holding constant the production of another good. d. producing at a point on a corner of the curve.

Education and training that improve the skill of the labor force are represented on the production possibilities curve by a(an) a. movement along the curve. b. inward shift of the curve. c. outward shift of the curve. d. movement toward the curve from an exterior point.

Which of the following decisions must be made by all economies? a. How much to produce? When to produce? How much does it cost? b. What is the price? Who will produce it? Who will consume it? c. What to produce? How to produce it? For whom to produce? d. None of the above.
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