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Question

The following table shows the production possibility of cricket bats and sarees of an imaginary economy
Production of Cricket Bats (in thousand)012345
Production of Sarees (in lakh)75706250300
If the production of cricket bats is increased from 3 thousand to 4 thousand, what is the opportunity cost that the economy has to bear?

A
Zero
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B
8 lakh sarees
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C
30 lakh sarees
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D
20 lakh sarees
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Solution

The correct option is D 20 lakh sarees

If the production of cricket bat is increased from 3 thousand to 4 thousand, the opportunity cost that economy has to bear will be 20 lakh sarees(50-30 lakh sarees) since it has to be sacrificed in order to produce more of cricket bats with limited resources and technology given.Opportunity cost of production of a commodity refers to the cost which the producer has to sacrifice in terms of the next best alternative use. Therefore, the sacrifice which is made to produce 4 thousand bats from3 thousand to four thousand thousand is 20 lakh sarees.


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