📚 Learning Guide
Analyzing Opportunity Costs
hard

Arrange the following steps in the correct order to analyze the opportunity costs when moving resources from the production of good Y to good X using a production possibilities curve (PPC): A) Evaluate the potential increase in production of good X, B) Identify the resources currently allocated to good Y, C) Calculate the opportunity cost of producing more of good X, D) Assess the new production point on the PPC.

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Learning Path
Learning Path

Question & Answer
1
Understand Question
2
Review Options
3
Learn Explanation
4
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Choose the Best Answer

A

B → A → C → D

B

B → D → A → C

C

A → B → C → D

D

B → A → D → C

Understanding the Answer

Let's break down why this is correct

Answer

To analyze opportunity costs when shifting resources from good Y to good X using a production possibilities curve (PPC), you first need to identify the resources currently allocated to good Y. Once you know which resources you are using for good Y, you can evaluate the potential increase in production of good X by reallocating those resources. After determining how much more of good X you can produce, you then calculate the opportunity cost, which is what you give up in terms of good Y. Finally, you assess the new production point on the PPC to see how this change affects overall production. For example, if moving resources allows you to produce 10 more units of good X but reduces good Y by 5 units, your opportunity cost is 5 units of good Y for the 10 units of good X.

Detailed Explanation

First, you need to see what resources are used for good Y. Other options are incorrect because This option suggests checking the new production point before knowing how much you can increase good X; This option starts with evaluating good X before identifying resources for good Y.

Key Concepts

Opportunity Costs
Production Possibilities Curve (PPC)
Resource Allocation
Topic

Analyzing Opportunity Costs

Difficulty

hard level question

Cognitive Level

understand

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