Two commodities ,x and y ,are produced by labour and capital.one unot of labour and capital are required in the production process .In addition, x is a commodity which requires storage and there is a capacity of storing up to 200 units of x.there are 120 units of labour and 90 units of capital
Draw the production possibility frontier
What will be the opportunity cost of x when we produce 40 units of y?
The opportunity cost will be 50 since;
Total revenue - economic profit= opportunity cost hence;