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A
True
B
False
Understanding the Answer
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Answer
When a country decides to produce more of good X instead of good Y, it has to take resources like labor and materials away from making good Y. The opportunity cost is the amount of good Y that is lost because those resources are now focused on good X. This means that the country must consider how much less of good Y they can produce when they shift their efforts. For example, if a factory that makes bicycles (good Y) is converted to make cars (good X), the opportunity cost is the number of bicycles that will not be produced. However, it's important to remember that opportunity cost also includes what else those resources could have been used for, not just the lost production of good Y.
Detailed Explanation
Opportunity cost is more than just what is lost. Other options are incorrect because This answer misses the bigger picture.
Key Concepts
Opportunity Cost
Resource Allocation
Production Possibilities Curve
Topic
Analyzing Opportunity Costs
Difficulty
hard level question
Cognitive Level
understand
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