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Fact 2.3.1
In an eight- hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter.In an eight- hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Given Fact 2.3.1, the opportunity cost of producing 1 loaf of bread is
A)3 kilograms of butter for Andy and 1 kilogram of butter for Rolfe.
B)8 kilograms of butter for both Andy and Rolfe.
C)1/3 kilogram of butter for Andy and 1 kilogram of butter for Rolfe.
D)20 minutes 1/3 hour)for Andy and 1 hour for Rolfe.
E)cannot be calculated.

Question

Quizplus · Accepted Answer

The opportunity cost of producing 1 loaf of bread is the amount of butter that could have been produced instead. For Andy, he could have produced 8 kilograms of butter in the same 8-hour day, so the opportunity cost of 1 loaf of bread is 8/24 = 1/3 kilogram of butter. For Rolfe, he could have also produced 8 kilograms of butter in the same 8-hour day, so the opportunity cost of 1 loaf of bread is also 1 kilogram of butter. Therefore, the answer is C.

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