Determine the opportunity cost of additional production at different outputs (meaning find the opportunity cost for each different possibility).
Determine which particular combination(s) is most efficient for: (i) car production; (ii) bicycle production. What do the patterns of opportunity costs reflect?
|Possibility||Cars (hundreds)||Bicycles (hundreds)|
Calculating Opportunity Cost for a Commodity
Opportunity cost (OC) is a fundamentally important concept in economics. It measures what must be sacrificed in terms of the output of one commodity in order to expand output of another commodity. The OC for a commodity typically follows a predictable pattern as its output expands.
Answer and Explanation:
The following table shows the calculated OC's associated with increasing production for each of the two commodities. Consider first the case of cars....
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from AEPA Economics (AZ035): Practice & Study GuideChapter 2 / Lesson 8
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