Opportunity Cost on the Production Possibility Curve

Steps:

• Locate current point on PPC: 80% resources to consumer goods yields 800 units consumer and 20 units capital.
• Double capital output to 40 units by shifting resources along the curve toward capital axis.
• At new point, consumer goods production drops to 200 units due to trade-off.
• Calculate loss: 800 consumer goods - 200 consumer goods = 600 units sacrificed.

Why C is correct:

• PPC shows trade-offs; reallocating for double capital output requires sacrificing 600 consumer goods, per diagram quantities.

Why the others are wrong:

• A: Capital gain is 20 units, but result emphasizes consumer loss, not capital gain.
• B: Doubling 20 units yields 20-unit gain, not 40.
• D: No capital loss occurs; output doubles, so gain instead.

Final answer: C