Refer to the graph of the Production Possibilities Frontier (PPF). If moving from point B to point C results in producing 10 more units of good X and 5 fewer units of good Y, what is the opportunity cost of this move?

• A. 10 units of good X
• B. 15 units of good Y
• C. 5 units of good Y
• D. There is no opportunity cost

Answer: (C)

Verified step by step guidance

1. Understand that the opportunity cost of moving from point B to point C on the Production Possibilities Frontier (PPF) is the amount of good Y that must be given up to produce more of good X.
2. Identify the change in the quantity of good X: it increases by 10 units when moving from point B to point C.
3. Identify the change in the quantity of good Y: it decreases by 5 units when moving from point B to point C.
4. Calculate the opportunity cost of producing 10 more units of good X as the amount of good Y forgone, which is 5 units.
5. Express the opportunity cost per unit of good X by dividing the units of good Y given up by the units of good X gained, i.e., opportunity cost per unit of X = \(\frac{5}{10}\) units of good Y.