Looking at the production possibilities curve below, what is the marginal opportunity cost of producing the second unit of clothing?1)    The production possibilities curve below show the...

Looking at the production possibilities curve below, what is the marginal opportunity cost of producing the second unit of clothing?

1)    The production possibilities curve below show the hypothetical relationship between the production of food and clothing in an economy.

Combination

Food

Clothing

A

 

0

 

4

B

 

7

 

3

C

 

13

 

2

D

 

18

 

1

E

 

22

 

0

 

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

First of all, remember that the marginal cost of a thing is how much more it costs to make that thing compared to making one fewer.  So, when you are asked to determine the marginal opportunity cost of the second unit of clothing, you have to look at how much more it cost to make that unit than it did to make just one unit.

In this when you make one unit of clothing, you can make 18 units of food.  When you make a second unit of clothing, you can only make 13 units of food.  This means that you gave up 5 units of food to make the second unit of clothing.  So the marginal opportunity cost for that second unit is 5 units of food.  Just to be sure you get the idea, let's look at the marginal cost of making a third unit of clothing.  When you make the third unit, you can only make 7 units of food.  That means the marginal opportunity cost of making the third unit of clothing is 6 units of food.

Sources:

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