Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is and she should specialize in the production of .
A) 2 fish; coconuts
B) 6 fish; coconuts
C) 0 fish; coconuts
D) 8 fish; fish

Question

Quizplus · Accepted Answer

Ann's opportunity cost of producing 1 coconut is 2 fish (since she gives up 8 fish to produce 4 coconuts). She should specialize in coconuts because her opportunity cost for coconuts is lower than Betty's.

Betty and Ann Live on a Desert Island