Question

Output of Good-X decreases by 400 units and output of Good-Y increases by 400 units, and some resources are shifted from the production of X to the production of Y, the marginal opportunity cost is

• A. 0.2
• B. 0.75
• C. 0.8
• D. 1.0

Answer 1

The correct option is D

1.0

Marginal opportunity cost is the cost when a unit more of a good is produced by withdrawing some resources from the production of other good. When resources are shifted from Good-X to Good-Y, the output of Good-X decreases by 400 units and output of Good-Y by 400 units, implying an overall change of 1.0 (400/400).