Table 3-11
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.

-Refer to Table 3-11.Falda's opportunity cost of one yard of cloth is
A) 2/3 bushel of wheat and Varick's opportunity cost of one yard of cloth is 2/5 bushel of wheat.
B) 2/3 bushel of wheat and Varick's opportunity cost of one yard of cloth is 5/2 bushels of wheat.
C) 3/2 bushels of wheat and Varick's opportunity cost of one yard of cloth is 2/5 bushel of wheat.
D) 3/2 bushels of wheat and Varick's opportunity cost of one yard of cloth is 5/2 bushels of wheat.

Question

Table 3-11
Assume that Falda and Varick can switch between producing wheat and producing cloth at a constant rate.
 
-Refer to Table 3-11.Falda's opportunity cost of one yard of cloth is
A) 2/3 bushel of wheat and Varick's opportunity cost of one yard of cloth is 2/5 bushel of wheat. 
B) 2/3 bushel of wheat and Varick's opportunity cost of one yard of cloth is 5/2 bushels of wheat. 
C) 3/2 bushels of wheat and Varick's opportunity cost of one yard of cloth is 2/5 bushel of wheat. 
D) 3/2 bushels of wheat and Varick's opportunity cost of one yard of cloth is 5/2 bushels of wheat.

Quizplus · Accepted Answer

Opportunity cost is calculated by dividing the quantity of one good that must be given up to produce one unit of another good. Falda can produce one yard of cloth by giving up 2/3 bushel of wheat, so that is her opportunity cost. Varick can produce one yard of cloth by giving up 2/5 bushel of wheat, so that is his opportunity cost. Therefore, the correct answer is A.

Table 3-11 Assume That Falda and Varick Can Switch Between Producing Wheat