Reference: Ref 2-8 (Table: Production in the United States and Germany) According to the table, the opportunity cost of producing one clock in the United States is _________, and the opportunity cost of producing one clock in Germany is _______.
A) five sofas; nine sofas
B) 0.4 sofas; 0.33 sofa
C) five clocks; nine clocks
D) 2.5 clocks; three clocks

Question

Reference: Ref 2-8 (Table: Production in the United States and Germany) According to the table, the opportunity cost of producing one clock in the United States is _________, and the opportunity cost of producing one clock in Germany is _______.
A) five sofas; nine sofas 
B) 0.4 sofas; 0.33 sofa 
C) five clocks; nine clocks 
D) 2.5 clocks; three clocks

Quizplus · Accepted Answer

To calculate the opportunity cost, we need to look at the ratio of the two goods being produced. In the US, the ratio of clocks to sofas produced is 1:5, while in Germany, the ratio is 1:3. This means that for every clock produced in the US, 5/1 or 5 sofas are given up, while in Germany, for every clock produced, 3/1 or 3 sofas are given up. Therefore, the opportunity cost of producing one clock in the US is 0.4 sofas (1/5) and the opportunity cost in Germany is 0.33 sofa (1/3).