Suppose a country's workers can produce 4 watches per hour or 16 rings per hour.If there is no trade

Question

Quizplus · Accepted Answer

The opportunity cost of a watch is the number of rings that must be given up to produce one watch. Since 1 hour of work can produce either 4 watches or 16 rings, the opportunity cost of 1 watch is 4 rings (the number of rings that must be given up to produce one watch). Therefore, option A is the correct answer. Option B is incorrect because 1 watch is worth more than 1/4th of a ring. Option C is incorrect because 1 watch is not worth 5 rings but only 4 rings. Option D is incorrect because 1 watch is worth more than 1/5th of a ring.

Suppose a Country's Workers Can Produce 4 Watches Per Hour