A Level Economics (9708)•9708/12/M/J/18
Explanation
Opportunity Cost on the Production Possibilities Frontier
Steps:
- Identify the PPF curve showing trade-offs between goods X and Y.
- Determine the slope of the PPF at the relevant point, which equals the opportunity cost of X in terms of Y.
- Calculate the absolute value of the slope to find units of Y forgone per unit of X produced.
- Read the slope as -2 from the graph, meaning 2 units of Y per unit of X.
Why B is correct:
- Opportunity cost is the units of Y sacrificed for one more X, defined as the absolute slope of the PPF, which is 2 units of Y.
Why the others are wrong:
- A misstates the cost as a fraction, ignoring the full 2 units forgone.
- C and D use unrelated large numbers not matching the PPF slope.
Final answer: B
Topic: Scarcity, choice and opportunity cost
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