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Fact 2.3.1
In an eight-hour day,Andy can produce either 24 loaves of bread or 8 kilograms of butter.In an eight-hour day,Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Given Fact 2.3.1,the opportunity cost of producing 1 loaf of bread is
A)20 minutes (1/3 hour)for Andy and 1 hour for Rolfe.
B)1/3 kilogram of butter for Andy and 1 kilogram of butter for Rolfe.
C)3 kilograms of butter for Andy and 1 kilogram of butter for Rolfe.
D)8 kilograms of butter for both Andy and Rolfe.
E)cannot be calculated.

Question

Quizplus · Accepted Answer

The opportunity cost of producing 1 loaf of bread is the amount of butter that could have been produced in the time it took to make the bread. For Andy, he can make 24 loaves of bread or 8 kilograms of butter in 8 hours. Therefore, the opportunity cost of making 1 loaf of bread for Andy is 8/24 = 1/3 kilogram of butter. For Rolfe, he can make 8 loaves of bread or 8 kilograms of butter in 8 hours. The opportunity cost of making 1 loaf of bread for Rolfe is 8/8 = 1 kilogram of butter. Therefore, the best choice is B.

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