The table shows the combinations of Good X and Good Y that an economy can produce when its resources are fully utilised:
| Good X (units) | 0 | 1 | 2 | 3 | 4 |
| Good Y (units) | 20 | 18 | 14 | 8 | 0 |
The economy now produces 1 unit of X and 18 units of Y. If it moves to producing 3 units of X, keeping its resources fully utilised, how many units of Y must it give up?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → 10 units
Given:
Now: 1 unit of X and 18 units of Y
Target: 3 units of X; the table gives 8 units of Y at this point
The opportunity cost of the extra X is the Y that has to be given up.
Y given up = 18 − 8 = 10 units of Y
Option (1) 6 units — Incorrect. This is the cost of the third unit only (14 − 8). The second unit also costs 4 units of Y.
Option (2) 8 units — Incorrect. This is the Y left at 3 units of X, not the Y given up.
Option (3) 14 units — Incorrect. This is the Y produced at 2 units of X.
NCERT (2026-27): “Production Possibility Frontier … If more of the scarce resources are used in the production of corn, less resources are available for the production of cotton and vice versa. Therefore, if we want to have more of one of the goods, we will have less of the other good. Thus, there is always a cost of having a little more of one good in terms of the amount of the other good that has to be forgone. This is known as the opportunity cost of an additional unit of the goods.” |