Opportunity Cost on the Production Possibilities Frontier

Steps:

• Locate point X on the PPF, which shows a combination of capital goods and consumer goods.
• Identify the endpoint for producing only consumer goods, maximizing consumer goods output.
• Calculate opportunity cost as the capital goods sacrificed when shifting from X to the consumer goods endpoint.
• Subtract to find the difference: capital goods at X minus zero at the endpoint.

Why B is correct:

• Opportunity cost is the value of the next-best alternative forgone; here, it's the 70 units of capital goods produced at X, per the PPF definition.

Why the others are wrong:

• A: Measures consumer goods gained, not the cost in capital goods forgone.
• C: Overstates the capital goods at X; actual is 70 units.
• D: Confuses total consumer output with the forgone capital goods.

Final answer: B