Explain, using a Production Possibility diagram, opportunity cost
Block Type
Knowledge Checkpoint
Knowledge checkpoint: Answer these actual Higher Economics exam questions:
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Explain, using a Production Possibility diagram, opportunity cost (Worth 3 marks)
Diagram:
Fully labelled diagram (axes labelled appropriately and
PPC curve) (1).
Quantities indicated on axes using numbers/letters (1).
Explanation:
Opportunity cost arises, because as production of one
good rises quantities of the alternative good are
sacrificed (1).
Credit example from diagram, eg as consumer goods rise
from 60 to 80, the opportunity cost is the 10 capital
goods sacrificed (1).
