[Solved] A country can produce either 1000 tons of s... If it produces 600 tons of steel, what is the opportunity cost in terms of aluminum, and what does this imply about the country's production efficiency? | Economic Awareness

Economic Awareness - Sectors of Indian Economy

A country can produce either 1000 tons of steel or 1500 tons of aluminum. If it produces 600 tons of steel, what is the opportunity cost in terms of aluminum, and what does this imply about the country's production efficiency?

A900 tons of aluminum; country is operating inside PPF

B600 tons of aluminum; country is operating inside PPF

C900 tons of aluminum; country is operating on PPF

D600 tons of aluminum; country is operating on PPF

Step-by-Step Solution

Step 1: Calculate opportunity cost per ton of steel
Opportunity cost per ton steel = 1500 aluminum / 1000 steel = 1.5 tons aluminum per ton steel.
Step 2: Calculate total opportunity cost for 600 tons steel
600 × 1.5 = 900 tons of aluminum forgone.
Step 3: Interpret production efficiency
Since the question implies trade-off, the country is operating on the Production Possibility Frontier (PPF), indicating efficient resource use.
Final Answer:
900 tons of aluminum; country is operating on PPF → Option C
Quick Check:
900 tons of aluminum; country is operating on PPF ✅

Quick Trick: Multiply chosen steel by opportunity cost per unit; PPF indicates efficiency.

Common Mistakes:

MISTAKES

Confusing inside PPF (inefficient) with on PPF (efficient) production.

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More Economic Awareness Quizzes

If it produces 600 tons of steel, what is the opportunity cost in terms of aluminum, and what does this imply about the country's production efficiency?

Step 1: Calculate opportunity cost per ton of steel

Step 2: Calculate total opportunity cost for 600 tons steel

Step 3: Interpret production efficiency

Final Answer:

Quick Check:

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