In one week Alice can produce 5 pairs of shoes or 4 bookshelves while Roger can produce 10 pairs of shoes or 6 bookshelves. Alice should specialize in the production of
A) shoes.
B) bookshelves.
C) either shoes or bookshelves.
D) neither shoes nor bookshelves.

Question

Quizplus · Accepted Answer

Alice has a lower opportunity cost in producing bookshelves compared to shoes when compared to Roger. For Alice, the opportunity cost of producing one bookshelf is 1.25 pairs of shoes (5 pairs of shoes / 4 bookshelves), whereas for Roger, it is 1.67 pairs of shoes (10 pairs of shoes / 6 bookshelves). Therefore, Alice should specialize in producing bookshelves, where she has a comparative advantage.

In One Week Alice Can Produce 5 Pairs of Shoes