Suppose nation A produces only two goods,apples and oranges.If nation A produces only apples,it can make 16 apples per day.If nation A produces only oranges,it can make 4 oranges per day.If the country has a constant production trade-off between apples and oranges,then the opportunity cost of one apple in nation A is:

Question

Quizplus · Accepted Answer

The opportunity cost of one apple is the amount of oranges that must be given up to produce one more apple. Since 16 apples can be produced instead of 4 oranges, the opportunity cost of one apple is 4/16 = 0.25 oranges.

Suppose Nation a Produces Only Two Goods,apples and Oranges