Refer lo the graph above. Bushra is producing inefficiently at point (s) The sha

Question

Refer lo the graph above. Bushra is producing inefficiently at point (s) The shape of the production possibilities frontier indicates that The opportunity cost of moving from point W to point X is the same as the opportunity cost of moving from point Z to point V the opportunity cost of moving from point W to point X is greater than the opportunity cost of moving from point Z to point V. The opportunity cost of moving from point W to point X is less than the opportunity cost of moving from point Z to point V. Point W is less efficient than point V

Explanation / Answer

25. Ans is option C i.e. point 'T'.

All points inside the PPF curve are attainable points but are being produced inefficiently.

26. Option A i.e. "The oppurtunity cost of moving from point W to point X is the same as the oppurtunity cost of moving from point Z to V."

Point W : 0 sandals , 4 clogs

point X: 5 sandals, 3 clogs

W to X implies, one clog can be sacrificed to produce 5 more sandals.

Point Z: 15 sandals, 1 clog

Point V: 20 sandals, 0 clog

Z to V implies, one clog can be sacrificed to produce 5 more sandals.

Hence the oppurtunity cost in both cases is same.

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