Currently an economy is producing at a point on its production possibilities frontier for goods X and Y. It is producing 100 units of good X and the opportunity cost of producing 1X is 3Y. If good X is produced at increasing opportunity costs, then when the economy produces 120 units of good X (on the same PPF) the opportunity cost of producing 1X would be ______Y.
a) greater than 3
b) 2.5
c) 2
d) 1
Ans: a) greater than 3
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A. ?MPC/(1 ? MPC). B. (1 ? MPC) × ?MPC. C. 1/(1 ? MPC). D. ?1/(1 ? MPC).