Question

2(a)(i) The opportunity cost of producing 30 units of cocoa is sacrificing 60 bales of textile. (ii) The opportunity cost of increasing textile production from 30 to 40 bales is reducing cocoa production by 5 tons or from 25 to 20 tons.
[Figure 1 shows the production possibility curve of a nation, with points X, G, H, Y marked at various coordinates.]
(b) Interpret the following points as found in the graph: (i) point Y; (ii) Point G; (iii) Point X.
(c) List three conditions that can enable the nation to produce at point X.
(d) State two basic economic concepts illustrated in the diagram above.
(e)(i) Define production possibility curve. (ii) What does the slope of the production possibility curve indicate?

Accepted Answer

(a)(i) The opportunity cost of producing 30 tons of cocoa is sacrificing 60 bales of textile.
(ii) The opportunity cost of increasing textile production from 30 to 40 bales is reducing cocoa production by 5 tons (or from 25 to 20 tons).
(b) (i) Point Y indicates under-utilization of resources (a point inside the curve). (ii) Point G is the optimum level (a point on the curve, showing efficient use of resources). (iii) Point X is impossible to achieve with current resources (a point outside/beyond the curve).
(c) Conditions that can make a country produce at point X (any three): i. Improvement in technology. ii. External sourcing for inputs and/or capital. iii. Discovery of new natural resources.
(d) Economic concepts illustrated in the diagram: the concept of opportunity cost; the concept of scarcity.
(e)(i) Production Possibility Curve can be defined as a graph which shows the combination of two goods which an economy can produce using all the available resources in the economy optimally. (ii) The slope of the PPC indicates opportunity cost.

WAEC Economics 2020 Theory — Question 2

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