The opportunity cost of a good rises as we devote more resources to producing it because some resources are better suited to the production of one good than another. This is known as the law of increasing opportunity cost. Diff: 1 Skill: Conceptual Topic: Law of increasing opportunity cost AACSB: A B C D E 50 45 35 20 0 Rugs Wheat 0 10 20 30 40 The table above represents five points on the production possibility frontier for the small country of Baca, which produces only rugs (measured in thousands) and wheat (measured in thousands of bushels): If the economy is currently at point A, what is the opportunity cost of producing an additional 10,000 bushels of wheat? If the economy is currently at point B, what is the opportunity cost of producing an additional 10,000 bushels of wheat? What if the economy is currently at point D? If the economy is currently at point A, the opportunity cost of producing an additional 10,000 bushels of wheat is 5,000 rugs. If the economy is currently at point B, the opportunity cost of producing an additional 10,000 bushels of wheat is 10,000 rugs. If the economy is currently at point D, the opportunity cost of producing an additional 10,000 bushels of wheat is 20,000 rugs. Diff: 1 Skill: Analytical Topic: Opportunity cost AACSB:
The opportunity cost of a good rises as we devote more resources to producing it because some resources are better suited to the production of one good than another. This is known as the law of increasing opportunity cost. Diff: 1 Skill: Conceptual Topic: Law of increasing opportunity cost AACSB: A B C D E Rugs 50 45 35 20 0 Wheat 0 10 20 30 40 The table above represents five points on the production possibility frontier for the small country of Baca, which produces only rugs (measured in thousands) and wheat (measured in thousands of bushels): If the economy is currently at point A, what is the opportunity cost of producing an additional 10,000 bushels of wheat? If the economy is currently at point B, what is the opportunity cost of producing an additional 10,000 bushels of wheat? What if the economy is currently at point D? If the economy is currently at point A, the opportunity cost of producing an additional 10,000 bushels of wheat is 5,000 rugs. If the economy is currently at point B, the opportunity cost of producing an additional 10,000 bushels of wheat is 10,000 rugs. If the economy is currently at point D, the opportunity cost of producing an additional 10,000 bushels of wheat is 20,000 rugs. Diff: 1 Skill: Analytical Topic: Opportunity cost AACSB:
test-bank-principles-of-microeconomics-10th-edition-case.docx