Question

Using a production possibility curve, explain how opportunity cost can be used to show the trade offs involved?
This is an 8 mark question, so i need more clarity and explanation please

Answer 1

The curve of possibility becomes decay heat increase in time so you need to very clear about that

Answer 2

Using a production possibility curve, explain how opportunity cost can be used to show the trade offs involved.

• Opportunity costs are constant no matter how far down the curve you walk when the PPC is a straight line. As you proceed down the curve when the PPC is concave (bowed out), opportunity costs rise. Chance costs are declining when the PPC is convex (bowed in).
• Because every point on PPC calculates the opportunity cost of giving up another good or service, it is also known as the opportunity cost curve.
• It demonstrates how much we sacrificed for the other stuff. For instance, because to a lack of resources, we would have to stop producing 1 million pairs of shoes in order to grow 8 million tonnes of watermelons.
• Opportunity cost is closely tied to the curve's form in the context of a PPF (see below). If the PPF curve is shaped like a straight line, the opportunity cost remains constant even while the output of various items is changing. Opportunity cost, however, typically varies based on the starting and finishing positions.
• The night before an exam, a student goes to the movies for three hours and $20. The opportunity cost is the amount of time spent learning and the money that could be used elsewhere. When a farmer decides to grow wheat, there is an opportunity cost associated with not doing so or using the resources in another way (land and farm equipment).

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