Paper 1 · Opportunity Cost and Scarcity
The diagram below shows the Production Possibility Curve (PPC) of a country X. [Diagram: potatoes on the vertical axis with levels c, d and b marked from the top down, and bread on the horizontal axis with levels e and a marked. The concave PPC runs from c on the potatoes axis down to the bread axis. Point F sits on the curve at potato level d and bread level e; point G sits on the curve at potato level b and bread level a.] With reference to the PPC above
Athe opportunity cost of producing Oa bread is Ob potatoes.
Bthe opportunity cost of producing Oa bread is bc potatoes.
Cthe opportunity cost of producing a loaf of bread is higher at F than at G.
Dthe opportunity cost of producing one more pocket of potatoes is higher at G than at F.
Explanation: Opportunity cost is the trade-off. To move to point G and produce Oa of bread the country gives up potato output from c down to b, so the opportunity cost of Oa bread is bc potatoes.
ZIMSEC Economics 6073/1 Paper 1, June 2019, Q1