Consider the following production possibilities for a country that produces computer modems and DVD drives, and then answer the questions that follow, assuming that currently residents of this nation produce 500,000 modems and 570,000 DVD drives.
Thousands of DVD drives Thousands of Modems
800 0
700 300
640 400
570 500
490 600
400 700
250 800
0 900
a) What is the opportunity cost of producing 200,000 more modems?
b) What is the opportunity cost of producing 70,000 more DVD drives?
c) What is the opportunity cost of completely specializing in the production of modems? Why might residents of this nation consider in specializing in modem production?