t id- 163751&course;_id-26983.18new attempt-18content id- 278296,18step Guns 600
ID: 1103978 • Letter: T
Question
t id- 163751&course;_id-26983.18new attempt-18content id- 278296,18step Guns 600 400 800 1200 Butter Production Possibilities Frontier In the above diagram which of the following statements is TRUE? The opportunity cost of moving from production combination A to production combination B is the loss of 1200 units of butter production to gain 600 units of guns. The opportunity cost of moving from production combination A to production combination B is the loss of zero units of butter production to gain 600 units of guns. The opportunity cost of moving from production combination A to production combination B is the loss of 400 units of butter production to gain 200 units of guns The opportunity cost of moving from production combination A to production combination B is the loss of 800 units of butter production to gain 400 units of guns The opportunity cost of moving from production combination A to production combination B is the loss of 200 units of butter production to gain 400 units of guns. 901 PM 11/5/2017Explanation / Answer
Production possibility curve can be defined as the different combination of two goods which can be produced by using all available resources efficiently.
As it can be seen in the PPF diagram when an economy moves from point A to Point B, there is the loss of 400 units of butter for the gain of 200 units of the gun.
Hence option third is the correct answer.
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