(Solved): 2. The opportunity cost of shifting production choices The following graph shows the production po ...

2. The opportunity cost of shifting production choices The following graph shows the production possibilities curve (PPC) of an economy that produces clothing and steel. The black points (plus symbols) represent three possible output levels in a given month. You can click on the points to see their exact coordinates. (?) B 0 100 700 800 200 300 400 500 600 STEEL (Thousands of tonnes) Suppose the economy initially produces 12,000 pieces of clothing and 500,000 tonnes of steel, which is represented by point A. The opportunity cost of producing an additional 4,000 pieces of clothing (that is, moving production to point B) is tonnes of steel. Suppose, instead, that the economy currently produces 420,000 tonnes of steel and 16,000 pieces of clothing, which is represented by point B. Now the opportunity cost of producing an additional 4,000 pieces of clothing (that is, moving to point C) is tonnes of steel. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 4,000 additional pieces of clothing at point B is the opportunity cost of 4,000 additional pieces of clothing at point A. This reflects the Grade It Now Save & Continue CLOTHING (Thousands of pieces) A 28 24 20 16 12 8 4 0 PPC +0