Problem-
Consider the following production possibilities table and frontier for wheat and lentils. Use this information to answer the following problems.
|
|
Wheat
|
Lentils
|
|
A
|
0
|
850
|
|
B
|
200
|
800
|
|
C
|
450
|
650
|
|
D
|
700
|
350
|
|
E
|
950
|
0
|
• If society is at point B, what is the additional opportunity cost of producing 250 more units of wheat? If society is producing at point C, what is the additional opportunity cost of producing 250 more units of wheat?
• In this production possibilities example, evidence exists of "increasing opportunity costs. Explain what is meant by "increasing opportunity costs" and why increasing opportunity costs exist.
• Explain why society would not choose to produce at point G and point H in the diagram shown above.
Additional Information-
The problem is belongs to Economics and it is about opportunity cost. This is a hypothetical problem about producing either wheat or lentils. Here opportunity cost is traced with producing additional units of wheat and explains about increasing opportunity.