Tom and Jerry have one day to work, but two tasks to focus on: building chairs and tables. If Tom spends all day building chairs, he will make 16 chairs. If he instead devotes his day to building tables, Tom will make 4 tables. If Jerry spends his day building chairs, he will make 14 chairs; if he spends the day building tables, he will make 7 tables. For Jerry, the opportunity cost of building a table is _____ chairs made.
A) 14
B) 7
C) 4
D) 2

Question

Quizplus · Accepted Answer

The opportunity cost is the value of the next best alternative given up. Since Jerry can make 14 chairs if he builds chairs, but only 7 tables if he chooses to build tables instead, the opportunity cost of building a table is 14 - 7 = 7 chairs.

The best choice for Tom and Jerry depends on their needs and what they are trying to accomplish. However, if their goal is to maximize the number of chairs and tables produced in one day, then Tom should focus on building chairs and Jerry should focus on building tables. Together they can produce 16 chairs and 7 tables.

Tom and Jerry Have One Day to Work, but Two