Betty and Ann live on a desert island. With a day's labour, 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 specialise in the production of ________.
A)0 fish per coconut; coconuts
B)6 fish per coconut; coconuts
C)8 fish per coconut; fish
D)2 fish per coconut; coconuts

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, thus 8/4 = 2 fish per coconut). She should specialize in coconuts because she has a lower opportunity cost in producing coconuts compared to Betty.

Betty and Ann Live on a Desert Island