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In the context of a PPF, opportunity cost is directly related to the shape of the curve (see below). If the shape of the PPF curve is a straight-line, the opportunity cost is constant as the production of different goods is changing. But, opportunity cost usually will vary depending on the start and end points.
The production possibilities frontier (PPF) for guns versus butter. Points like X that are outside the PPF are impossible to achieve. Points such as B, C, and D illustrate the trade-off between guns and butter: at these levels of production, producing more of one requires producing less of the other. Points located along the PPF curve represent ...
In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, ...
In figure 6, the underlying assumption is the usual decreasing returns to scale, due to which the PPF is concave to the origin. In case we assumed increasing returns to scale, say if Crusoe embarked upon a mass production movement and hence faced decreasing costs, the PPF would be convex to the origin.
Opportunity cost is also often defined, more specifically, as the highest-value opportunity forgone. So let's say you could have become a brain surgeon, earning $250,000 per year, instead of a ...
The offer curve is derived from the country's PPF. We describe a Country named K which enjoys both goods Y and X. It is slightly better at producing good X, but wants to consume both goods. It wants to consume at point C or higher (above the PPF). Country K starts in Autarky at point C. At point C, country K can produce (and consume) 3 Y for 5 X.
Opportunity cost can also be considered as the value of the resource in its next best use or next highest-valued alternative. Here are some examples to help better understand opportunity cost:
The FDIC is an independent government agency charged with maintaining stability and public confidence in the U.S. financial system and providing insurance on consumer deposit accounts.