Suppose that a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one cake?
A)0.4 pies
B)0.25 pies
C)2.5 pies
D)0.4 cakes
E)2.5 cakes

Question

Quizplus · Accepted Answer

The opportunity cost of producing one cake is the number of pies that could have been produced instead. If 125 pies can be made instead of 50 cakes, then the opportunity cost of one cake is 125/50 = 2.5 pies.

Suppose That a Bakeshop with 5 Employees Can Produce Both