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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.
-Refer to Fact 2.3.1.The opportunity cost of producing 1 kilogram of butter is
A)1 hour for Andy and 1 hour for Rolfe.
B)3 loaves of bread for Andy and 1/3 loaf of bread for Rolfe.
C)8 loaves of bread for Rolfe and 24 loaves of bread for Andy.
D)3 loaves of bread for Andy and 1 loaf of bread for Rolfe.
E)20 minutes 1/3 hour)for Andy and 1 hour for Rolfe.

Question

Quizplus · Accepted Answer

The opportunity cost of producing 1 kilogram of butter for Andy is the amount of bread he could have produced instead, which is 24 loaves of bread in 8 hours, or 3 loaves of bread per kilogram of butter (24 loaves / 8 kilograms = 3 loaves per kilogram). For Rolfe, the opportunity cost is 8 loaves of bread in 8 hours, or 1 loaf of bread per kilogram of butter (8 loaves / 8 kilograms = 1 loaf per kilogram).

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