QUESTION 1
The following diagram shows the production possibilities curve of a hypothetical country at a
given time.
Tons of wheat
100
90
25
75
B
E
C
D
20
75 80 90 100
Tons of steel
a)
Based on the diagram above, answer the following questions:
i) Calculate the opportunity cost of producing the first 45 tons of wheat.
(2 marks)
ii) Describe what point G indicates.
(2 marks)
iii) What type of opportunity cost is the economy experiencing.
(1 mark)
