Suppose that one unit of labour can produce either 5 units of wool or 2 pineapples. What is the opportunity cost of producing 1 pineapple?
A)2/5 unit of wool
B)5 units of wool
C)5/2 units of wool
D)zero
E)2 units of wool

Question

Quizplus · Accepted Answer

To determine the opportunity cost of producing 1 pineapple, we need to calculate how much wool we would have to give up in order to produce that 1 pineapple.

If one unit of labour can produce 2 pineapples, then it could also produce 10 units of wool (since 1 unit of labour can produce 5 units of wool). Therefore, the opportunity cost of producing 1 pineapple is 10 units of wool divided by 2 pineapples, which equals 5 units of wool per pineapple.

Therefore, the answer is (C) 5/2 units of wool.

As for the best choice(s), it depends on what you value more - wool or pineapples. If you value wool more than pineapples, then the best choice would be to produce only wool. If you value pineapples more than wool, then the best choice would be to produce only pineapples. If you value both equally, then the best choice would be to produce a combination of both that maximises your total output given your resource constraints.

Suppose That One Unit of Labour Can Produce Either 5