Opportunity Cost in Production Trade-offs

Steps:

• Identify initial output: 100 units Y and 200 units X.
• Identify new output: 120 units Y and 170 units X.
• Calculate increase in Y: 120 - 100 = 20 units.
• Calculate decrease in X: 200 - 170 = 30 units, which is the opportunity cost of the extra 20 Y.

Why B is correct:

• Opportunity cost is the amount of X sacrificed for additional Y, defined as the reduction in X output (30 units) when Y increases by 20 units.

Why the others are wrong:

• A: Assumes a 1:1 trade-off, but the actual sacrifice is 30 X for 20 Y.
• C: Refers to the new Y production level, not the X forgone.
• D: Refers to the new X production level, not the sacrifice.

Final answer: B