Consumption Goods Capital Goods
10 0
9 1
7 2
4 3
0 4

Why is the opportunity cost of producing the fourth unit of capital 4 units of consumption goods but the opportunity cost of producing 4 units of capital is 10 units of consumption goods?

a. Because the opportunity cost of capital goods is constant while the opportunity cost of consumption goods is g as this economy moves from more consumption goods to more capital goods.
b. Because the opportunity cost of the fourth unit of capital is the consumption goods that must be given up for this economy to move from three units of capital to four units of capital, but the opportunity cots of four units of capital is
the amount of consumption goods that must be given up to go from zero units of capital to four units of capital.
c. Because consumption goods are more valuable than capital goods.
d. It isn't. The opportunity cost of the fourth unit and the opportunity cost of four units is the same.

Question

02-07-2020
Business

contestada

Consumption Goods Capital Goods
10 0
9 1
7 2
4 3
0 4

Why is the opportunity cost of producing the fourth unit of capital 4 units of consumption goods but the opportunity cost of producing 4 units of capital is 10 units of consumption goods?

a. Because the opportunity cost of capital goods is constant while the opportunity cost of consumption goods is g as this economy moves from more consumption goods to more capital goods.
b. Because the opportunity cost of the fourth unit of capital is the consumption goods that must be given up for this economy to move from three units of capital to four units of capital, but the opportunity cots of four units of capital is
the amount of consumption goods that must be given up to go from zero units of capital to four units of capital.
c. Because consumption goods are more valuable than capital goods.
d. It isn't. The opportunity cost of the fourth unit and the opportunity cost of four units is the same.

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Answer: b. Because the opportunity cost of the fourth unit of capital is the consumption goods that must be given up for this economy to move from three units of capital to four units of capital, but the opportunity cost of four units of capital is the amount of consumption goods that must be given up to go from zero units of capital to four units of capital.

Explanation:

The opportunity cost of the 4th unit of capital refers to how many units of consumption need to be given up for the economy to move from the third unit to the forth unit of capital. In other words, the economy needs to give up 4 more goods to move from the 3rd unit of capital to the fourth.

But if the Economy was to produce the entire 4 units of capital it would have to give up the entire 10 units of consumption in total.