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Assignment #1

# Assignment #1 - The Production Possibilities Frontier A...

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The Production Possibilities Frontier A represents 20 bottles of wine and 20 bales of cotton. B represents 15 bottles of wine and 25 bales of cotton. C represents 5 bottles of wine and 30 bales of cotton. 1. What is opportunity cost for this country in terms of wine when it moves from point A to point B? a. Opportunity cost is -5 bottles of wine. The number is negative because it’s decreasing in the country as less wine is produced. 20 bottles of wine are produced, yet after time the number decreases to 15 bottles produced. 2. What is the opportunity cost for this country in terms of wine when it moves from point B to point C? a. Opportunity cost is -10 bottles of wine. The number is negative because it’s decreasing in the country as less wine is produced. 15 bottles of wine is produced, yet after time the number decreases to 5 bottles produced. This decrease in opportunity cost is even more significant than the decrease in Situation #1.
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