Question on: JAMB Economics - 2002

Here's how to determine the opportunity cost from the production possibility frontiers (PPFs):

• Opportunity Cost Formula: Opportunity Cost of X = (Change in Y) / (Change in X), where X is the good whose opportunity cost we're calculating, and Y is the other good.

• Ghana:

  • Ghana can produce 20 units of cocoa or 5 units of cotton.
  • To find the opportunity cost of 1 unit of cotton, determine how much cocoa Ghana gives up.
  • Opportunity Cost of 1 Cotton (Ghana) = 20 cocoa / 5 cotton = 4 cocoa.
  • Alternatively, the question asks the opportunity cost of cotton in terms of cocoa. Therefore the correct calculation is: