Scott and Cindy both produce only pizza and tacos. In one hour, Scott can produce 20 pizzas or 40 tacos. In one hour, Cindy can produce 30 pizzas or 40 tacos. Scott's opportunity cost of producing 1 taco is
A) 20 pizzas.
B) 1/2 of a pizza.
C) 2 tacos.
D) 1 pizza.
E) 2 pizzas.

Question

Quizplus · Accepted Answer

Scott's opportunity cost of producing 1 taco is the amount of pizza he has to give up to produce it. Since he can produce 20 pizzas or 40 tacos in an hour, for every taco he produces, he gives up 1/2 of a pizza (20 pizzas / 40 tacos = 0.5 pizza per taco).

Scott and Cindy Both Produce Only Pizza and Tacos