Question

can someone whelp me with this opportunity cost question?

Answer 1

What's your question exactly?

Answer 2

well the answers are already there I'm just not sure how they get it
there's also a variation between donuts and coffee and i'm not understanding how you find out which one is which in your answer

Answer 3

i'm talking about the question where it asks how to get from J to L and how to get from M to L

Answer 4

I'm looking at panel (a)

point J represents where 6 cups of coffee are made and NO donuts are made

agreed? or no?

Answer 5

yes

Answer 6

what does point L represent?

Answer 7

cups of coffee?

Answer 8

where is L located in terms of coordinates

Answer 9

if you started at the bottom left corner, how would you get to point L? What instructions would you give to a friend if you couldn't just point to L and say "go here"

Answer 10

you would have to move to the right twice and go down 4 times

Answer 11

look again

you need to move over 3 spots to the right, and 4 units up

so point L is at (3,4)

Answer 12

what does (3,4) mean?

x = 3 means 3 donuts are made
y = 4 means 4 cups of coffee are made

Answer 13

oh my bad, I looked one spot over too far

Answer 14

yes it's (2,4)

Answer 15

yes

Answer 16

L is at (2,4) so 2 donuts are made & 4 cups of coffee are made

Answer 17

where is M located? what are the coordinates?

what do the coordinates mean in this context (how many of each item are made)?

Answer 18

okay so M is at (4,0 meaning there is 4 donuts made and 0 cups of coffee

Answer 19

bingo

Answer 20

finally, how about point K?

Answer 21

1,4 meaning there is only one donut made and there are 4 cups of coffee

Answer 22

so point K represents where it's possible to happen

why do we know it's possible? Because we can clearly produce more of either products if we move to the PPF curve edge

point N is NOT possible because we don't have enough resources

it is impossible to go outside the PPF curve region simply because resources are scarce

Answer 23

point K is not 100% efficient because not all resources are used or there is waste. Since it's possible to produce more and move to the edge of the curve, point K is inefficient

So if an economy is operating at point K, then it's desirable to somehow move to the curve. How/where it moves to is always up for debate

Answer 24

oh yes
i got the first tow questions

Answer 25

IF point K was efficient, then the curve would somehow go through point K

Answer 26

i am talking about the questions asking about J to L and M to L

Answer 27

ok I see now

Answer 28

let's focus on the movement from J to L

Answer 29

okay you see hoe for the answers one of them is 2 cups of coffee and the other one is cups of donut?

Answer 30

how do you know which answer is coffee and which answer is donut

Answer 31

J is at (0,6)
0 donuts made
6 cups of coffee made


L is at (2,4)
2 donuts made
4 cups of coffee

Answer 32

when we go from J to L, which number goes up? which number goes down?

Answer 33

donuts goes up

Answer 34

coffee goes up

Answer 35

i mean coffee goes down**

Answer 36

donuts go up but coffee goes down, right?

Answer 37

I'll be right back

Answer 38

yes

Answer 39

okay

Answer 40

how much does donuts go up by?
how much does the coffee amount decrease?

Answer 41

donut goes up by 2 coffee goes down by 2

Answer 42

yes so imagine in this universe that dollars do not exist

only coffee and donuts exist

to go from J to L, we gain 2 donuts but it costs us 2 cups of coffee

so think of it as you're paying for those extra donuts with the cups of coffee

this is the tradeoff anyone faces: the more donuts you want, the less coffee you get

Answer 43

that's why the opportunity cost is 2 cups of coffee

we lost those 2 cups of coffee moving to point L

Answer 44

the cost is NOT 2 donuts because we didn't lose 2 donuts. We gained 2 donuts

a cost is always something you give up or lose. A cost is something negative (the degree of how negative depends)

Answer 45

ooohhh

Answer 46

it sounds like you see how they got the answer for the J to L movement

hopefully you see how they got the answer for the M to L movement?

Answer 47

Jim honestly you've been so much help thank you.. my mind just wasn't in the right place because i was stressing out but thank you, you clarified everything!

Answer 48

I'm glad it makes sense now

Answer 49

thanks so much

Answer 50

glad to be of help