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Question

An economy produces two goods: watches and shoes. The following table summarises its production possibilities. Calculate the marginal opportunity cost of watches at various combinations. Give a diagrammatic presentation of production possibilities.
Watches (Millions)012345
Shoes (Thousands)90,00080,00068,00052,00034,00010,000

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Solution

Watches (Millions)Shoes (Thousands)Marginal Opportunity Cost
090,000-
180,00010,0001=10,000
268,00012,0001=12,000
352,00016,0001=16,000
434,00018,0001=18,000
510,00024,0001=24,000

883152_959713_ans_f3fd1f44753d428f8d44e766d043137c.jpg

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