Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The total cost of Good A
B
The decrease in Good B production that could have been produced with the same resources
C
The marginal benefit obtained from Good A
D
The fixed costs of production for both goods
Understanding the Answer
Let's break down why this is correct
Answer
When a country decides to produce more of Good A, which has a high marginal cost, it means that it has to give up a significant amount of Good B. This is because resources like land, labor, and capital are limited, so using them to make more of Good A means they cannot be used to make Good B. The opportunity cost is the value of the Good B that could have been produced instead. For example, if producing an additional unit of Good A requires sacrificing the production of two units of Good B, then the opportunity cost is those two units of Good B that the country could have had. This concept helps us understand the trade-offs that come with resource allocation in an economy.
Detailed Explanation
When a country makes more of Good A, it uses resources that could have made Good B. Other options are incorrect because Some might think the total cost of Good A matters here; People might confuse marginal benefit with opportunity cost.
Key Concepts
Marginal cost
Opportunity cost of production
Topic
Opportunity Cost and PPC
Difficulty
medium level question
Cognitive Level
understand
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