If an economy transitions from generating 10 units of A and 4 of B to 7 units of A and 5 of B, the opportunity cost of the 5th unit of B is ?
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Answer: C. 3As
Explanation
Moving from 10 units of A and 4 of B to 7 units of A and 5 of B requires sacrificing 3 units of A. The exact trade-off between the two goods defines the immediate opportunity cost of the additional production choice. Dividing the sacrificed amount of good A by the gained amount of good B yields a cost of exactly 3As. Opportunity cost measures the explicit value of the next best alternative foregone when making a distinct economic choice. Production possibility frontiers graphically illustrate the maximum feasible combinations of two commodities an economy can produce efficiently. Moving along this production boundary always involves relinquishing a specific quantity of one good to obtain more of another.
Option A is incorrect because 7As represents the remaining quantity of good A rather than the units sacrificed during the transition. Option B is incorrect because 10As reflects the initial starting inventory of good A rather than the net change in production. Option D is incorrect because 1A underestimates the total quantity of good A given up to secure the fifth unit of good B.
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