This economics question tests your understanding of economic models and analysis. The step-by-step answer below applies the relevant framework and explains the reasoning.
ScanSolve AI Answer
✅ Correct. Step 1: Identify the coordinates of points A and B from the top graph. At point A, the economy produces 30 units of Butter and 20 units of Guns. At point B, the economy produces 40 units of Butter and 10 units of Guns. Step 2: Calculate the gain in Butter when moving from point A to point B. Gain in Butter = (Butter at B) - (Butter at A) = 40 - 30 = 10 units of Butter. Step 3: Calculate the loss in Guns (opportunity cost) when moving from point A to point B. Loss in Guns = (Guns at A) - (Guns at B) = 20 - 10 = 10 units of Guns. Step 4: Compare the calculated opportunity cost with the given statement. The statement says, "The opportunity cost of gaining 10 units of butter is 10 units of guns." Our calculation shows that gaining 10 units of butter (moving from A to B) requires giving up 10 units of guns. Therefore, the statement is correct. Drop the next question.