Question

If the output Y1 decreases by 500 units and output Y2 increases by 500 units when some resources are shifted from the production of Y1 to the production of Y2, then the marginal opportunity cost is:

• A. 0.75
• B. 0.80
• C. 1.00
• D. 0.20

Hint:

Marginal Opportunity Cost = Change in Y1 / Change in Y2

Answer 1

The Correct Option is C

Step 1: Marginal opportunity cost \( = \left| \dfrac{\Delta Y_1}{\Delta Y_2} \right| \), the units of Y1 given up per unit of Y2 gained.
Step 2: Substitute \( \Delta Y_1 = 500 \), \( \Delta Y_2 = 500 \).
Step 3: \( MOC = \dfrac{500}{500} = 1 \).
\[ \boxed{1.00} \]