Question

Based on the production possibilities curve for books and pencils shown, what is the opportunity cost of producing a book?

How to find
there is only 2 numbers

Answer 1

Opportunity cost of a book = how many pencils you must give up to produce one more book. If the PPF is a straight line determined by two endpoints, use:

Opportunity cost of 1 book = (change in pencils) / (change in books)

In practice:
1. Identify the two endpoint coordinates (books, pencils) or the two intercepts: max pencils when books = 0 and max books when pencils = 0.
2. Compute Δpencils = pencils_at_point1 − pencils_at_point2.
3. Compute Δbooks = books_at_point2 − books_at_point1.
4. OC per book = Δpencils / Δbooks (take the absolute value).

Example: if the endpoints are (0 books, 100 pencils) and (20 books, 0 pencils),
Δpencils = 100 − 0 = 100, Δbooks = 20 − 0 = 20, so OC of one book = 100/20 = 5 pencils per book.

Tell me the two numbers (the two endpoints or intercepts) and I’ll compute the exact opportunity cost for your graph.