-Refer to Table 3-1. What is the opportunity cost of 1 kg of potatoes for the rancher?
A) 3 hours of labour
B) 4 hours of labour
C) 3/4 kg of meat
D) 4/3kg of meat

Question

-Refer to Table 3-1. What is the opportunity cost of 1 kg of potatoes for the rancher?
A) 3 hours of labour 
B) 4 hours of labour 
C) 3/4 kg of meat 
D) 4/3kg of meat

Quizplus · Accepted Answer

The opportunity cost of producing 1 kg of potatoes for the rancher is the amount of meat that could have been produced with the resources used to produce that 1 kg of potatoes. If the rancher can produce meat at a rate that requires fewer hours per kg than potatoes, the opportunity cost is calculated by the ratio of production rates or the trade-off between producing meat versus potatoes. Without the specific data from Table 3-1, the general principle is that the opportunity cost is the amount of one good that must be given up to produce another good, hence the answer involves a ratio of goods (meat per kg of potatoes).