Suppose Joe can prepare 10 sandwiches or 5 pizzas in an hour and Beth can produce 12 sandwiches or 9 pizzas. Which of the following is true?
A) Beth should produce pizza because she has a higher opportunity cost of producing pizza than does Joe.
B) Joe should produce pizza because he has a lower opportunity cost of producing pizza than does Beth.
C) Beth should produce pizza because she has a lower opportunity cost of producing pizza than does Joe.
D) Joe should produce pizza because he has a higher opportunity cost of producing pizza than does Beth.

Question

Quizplus · Accepted Answer

To determine the opportunity cost of producing one unit of pizza, we must calculate the opportunity cost of producing one sandwich and the opportunity cost of producing one pizza for both Joe and Beth.

For Joe, the opportunity cost of producing one pizza is: 
1 hour / 5 pizzas = 0.2 hours per pizza 
The opportunity cost of producing one sandwich is: 
1 hour / 10 sandwiches = 0.1 hours per sandwich

For Beth, the opportunity cost of producing one pizza is: 
1 hour / 9 pizzas = 0.111 hours per pizza 
The opportunity cost of producing one sandwich is: 
1 hour / 12 sandwiches = 0.083 hours per sandwich

Therefore, Beth has a lower opportunity cost of producing pizza than Joe (0.111 versus 0.2). So, it would be more efficient for Beth to produce pizza while Joe produces sandwiches. Therefore, Choice C is correct.

Suppose Joe Can Prepare 10 Sandwiches or 5 Pizzas in an Hour