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JAMB Economics 1992 Question 3

Question 3

Basic Concepts

For an economy which last year produced only two commodities X and Y, the real cost of the quantity of X which it produced can be measured by the

  1. A.amount of X it could not produce
  2. B.amount of Y it produced
  3. C.total amount of Y it could have produced
  4. D.extra amount of Y it could have produced
Show the answer and explanation

Answer: C (total amount of Y it could have produced)

Explanation

The real (opportunity) cost of X is the amount of Y the economy gave up, i.e. the Y it could have produced with the resources used for X.