According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles,

A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.

Question

Ashley O'Rourke · Accepted Answer

Final Answer : C, Explanation :  As the economy moves from Point D to Point B on a production possibility frontier (PPF), the opportunity cost of producing hybrid cars in terms of motorcycles increases due to the law of increasing opportunity costs, which states that as production of one good increases, the opportunity cost of producing an additional unit of this good (in terms of the other good) increases, assuming resources are not equally efficient in producing both goods.

According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles,

A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.

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Learning Objectives

Related questions

According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles,A) remains constant.B) decreases.C) increases.D) initially increases, then decreases.

Definitions

Learning Objectives

Learning Objectives

Related questions

According to Figure 2.4, as the economy moves from Point D to Point B, the opportunity cost of hybrid cars, measured in terms of motorcycles,

A) remains constant.
B) decreases.
C) increases.
D) initially increases, then decreases.