If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. What is Leo's opportunity cost of making a pound of fudge?
A)0.8 of a pound of toffee
B)1.25 pounds of toffee
C)4 pounds of toffee
D)5 pounds of toffee

Question

If Ana devotes all her time to making fudge, she can make 3 pounds of fudge an hour, and if she devotes all her time to making toffee, she can make 2 pounds of toffee an hour. If Leo devotes all his time to making fudge, he can make 4 pounds of fudge an hour, and if he devotes all his time to making toffee, he can make 5 pounds of toffee an hour. What is Leo's opportunity cost of making a pound of fudge?
A)0.8 of a pound of toffee 
B)1.25 pounds of toffee 
C)4 pounds of toffee 
D)5 pounds of toffee

Quizplus · Accepted Answer

If Leo spends an hour making fudge, he gives up on 5 pounds of toffee to get 4 pounds of fudge, so his opportunity cost of each pound of fudge is 1.25 (= 5/4)pounds of toffee.

If Ana Devotes All Her Time to Making Fudge, She