Suppose one unit of labour can produce either 5 units of wool or 2 pineapples.What is the opportunity cost of producing 1 pineapple?
A)5 units of wool
B)2 units of wool
C)2/5 unit of wool
D)5/2 units of wool
E)zero

Question

Quizplus · Accepted Answer

The opportunity cost of producing 1 pineapple is the amount of wool that could have been produced instead. Since 1 unit of labor can produce 5 units of wool or 2 pineapples, the opportunity cost of 1 pineapple is 5/2 units of wool.

Suppose One Unit of Labour Can Produce Either 5 Units