Scenario: With her available resources, Wendy can produce 20 greeting cards or 10 earrings. Sarah, with the resources she has, can produce 5 greeting cards or 15 earrings.
-Refer to the scenario above.What is Sarah's opportunity cost of producing 1 earring?

Question

Quizplus · Accepted Answer

Sarah's opportunity cost of producing 1 earring is the amount of greeting cards she has to give up to produce that earring. Since she can produce 5 greeting cards or 15 earrings, for each earring produced, she gives up 1/3 (5/15) of a greeting card, which is 0.33 greeting cards.

Scenario: with Her Available Resources, Wendy Can Produce 20 Greeting