Opportunity Cost from Production Possibilities Schedule

Steps:

• Identify the production possibilities frontier (PPF) showing trade-offs between desks and chairs.
• Calculate the marginal opportunity cost of the 4th desk as the chairs forgone to produce it instead of the 3rd.
• Calculate the marginal opportunity cost of the 5th desk as the chairs forgone to produce it instead of the 4th.
• Opportunity costs increase due to the law of increasing opportunity costs, reflecting resource specialization.

Why A is correct:

• Matches the definition of marginal opportunity cost, where producing the 4th desk requires giving up 2 chairs and the 5th requires 3 chairs, as derived from the PPF slope.

Why the others are wrong:

• B misapplies cumulative costs instead of marginal, overstating the trade-off per additional desk.

Final answer: A