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Introduction of Micro-Economics — Economics STD 11 Commerce — Question

CBSE BoardEnglish MediumSTD 11 CommerceEconomicsIntroduction of Micro-Economics3 Marks
Question
Define Marginal Opportunity Cost. Explain the concept with a hypothetical numerical example.
✓

Answer

  1. Marginal oppor-tunity cost is an addition to a cost in terms of a number of units of a commodity sacrificed to produce one additional unit of another commodity.
  2. Marginal opportunity cost can also be termed marginal rate of transformation, Marginal rate of transformation is the ratio of number of units of a good sacrificed to produce one additional unit of another commodity.
$\text{MRT}{_\text{X,Y}}=\frac{\text{Amount of good Y Sacrificed}}{\text{Amount of good X gained}}=\frac{\Delta\text{Y}}{\Delta\text{X}}$
Production
Possibilities
(Combination)
Rice (in lakh tons)
Guns (in thous-
ansd)
Moc of
Rice (in thousand
Guns)
MFT
A
0
15
-
-
B
1
14
1 ( =15-14)
1G:1R
C
2
12
2 ( =14-12)
2G:1R
D
3
9
3 ( =12-9)
3G:1R
E
4
5
4 (= 9-5)
4G:1R
F
5
0
5 ( =5-0)
5G:1R

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