What is the opportunity cost

Reference no: EM13133696

Individuals, firms, governments, and countries are faced with choices because all resources are scarce. A production possibility curve (see below) measures the maximum combination of outputs that can be achieved from a given number of inputs. In practice economists use a production possibility curve with two goods to explain the concept of opportunity cost.

In the example below the two goods that a country can produce are health care and education.

Use the graph above to answer the following questions:

1409_opportunity cost.png

a. How many units can be produced if a country uses all of its resources on health care?
b. How many units can be produced if a country uses all of its resources on education?
c. If a country is currently producing 11 units of health care and 16 units of education, what is the opportunity cost of producing 5 more units of education?

While a production possibility curve describes the possible combinations of output that can be produced with a given set of inputs, it does not tell us who should receive, and in what amount, the health care and education that gets produced. Write an essay of at least 300 words but no more than 600 words in length which discusses the social justice implications of how to distribute the health care and education that gets produced.

Reference no: EM13133696

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