Question 41

The opportunity cost of moving from point T to U on the PPC is Y3-Y2 of good Y.

When moving from point T to U on the Production Possibility Curve (PPC), the opportunity cost is represented by the difference in the quantity of good Y, specifically Y3 - Y2.

A) Y3-Y2 of good Y

This option is correct because it accurately represents the opportunity cost associated with the movement from point T to U on the PPC. The opportunity cost is defined as the loss of potential gain from other alternatives when one alternative is chosen. In this case, moving from T to U results in a decrease in the quantity of good Y from Y3 to Y2.

B) Y3-Y1 of good Y

This option is incorrect as it does not reflect the correct quantities involved in the transition from point T to U. Y3 - Y1 represents a different scenario that does not pertain to the opportunity cost of the specific movement in question.

C) Y1-Y2 of good Y

Option C is also incorrect because it suggests a different range of quantities that do not apply to the transition from point T to U on the PPC. The values Y1 and Y2 do not accurately represent the quantities lost when moving between the specified points.

D) X2-X1 of good X

This option is incorrect as it relates to good X rather than good Y. The opportunity cost of moving from point T to U is focused on the changes in good Y, making this choice irrelevant to the question.

Conclusion

The correct answer, Y3 - Y2 of good Y, clearly illustrates the concept of opportunity cost in the context of the PPC. All other options fail to represent the specific quantities involved in the transition from point T to U, either by addressing the wrong good or by not accurately capturing the trade-offs present in that movement.