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A-Level Economics · Production possibility frontier diagram question

Moving from A (4 consumer, 8 capital) to B (9 consumer, 3 capital): what is the OPPORTUNITY COST?

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The diagram

The answer

5 units of capital goods. To gain 5 consumer goods you sacrifice 8−3 = 5 capital goods — the next best alternative forgone. Opportunity cost = what you GIVE UP: capital goods fall from 8 (at A) to 3 (at B), so those extra consumer goods cost 5 capital goods.

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This is one of 3 questions on the production possibility frontier diagram — every corner lettered, every wrong answer diagnosed.

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