Econ 2302_ Module 1 _Intro- Production Possibilities

What is the opportunity cost of producing one more cake as we move from combination B to combination C?

2.66 cookies

What is the opportunity cost of producing one more cake if we move from combination C to combination D?

5.5 cookies

Opportunity cost? What is that exactly?

It is what we have to give up in order to make more cakes

What about point G - that looks like a lot of cookies and cakes?

Sorry, we don't have enough ingredients to make that many cookies and cakes

A law? What is it called?

The law of increasing opportunity costs

So the points A B C D and E - What do those represent?

They are attainable and efficient production combinations of cookies and cakes we can make

What is the opportunity cost of one cake if we move from combination A to combination B?

1 cookie

What is the opportunity cost of one cake if we move from combination D to combination E?

18.0 (E-D)/(E-D)

If we are making more cakes, how are we measuring opportunity cost?

It's equal to the number of cookies we give up to make more cakes

What about point F?

We can make that combination of cookies and cakes, but if we use our ingredients more efficiently, we can make even more