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. The opportunity cost of building one table is _____ for Tom and _____ for Jerry. Therefore, Tom should specialize in _____.
A) 4 chairs; 2 chairs; chairs
B) 16 chairs; 14 chairs; chairs
C) 4 chairs; 2 chairs; tables
D) 16 chairs; 14 chairs; tables

Question

Quizplus · Accepted Answer

The opportunity cost of building one table is the number of chairs that could have been produced instead. 
For Tom, the opportunity cost of building one table is 16/4=4 chairs, which means that for every table he builds, he is sacrificing the production of 4 chairs. 
For Jerry, the opportunity cost of building one table is 14/7=2 chairs. 
Therefore, Tom should specialize in building tables since his opportunity cost of building one table is lower than Jerry's.

Tom and Jerry Have One Day to Work, but Two