Suppose that a worker in Country A can make either 10 iPhones or 5 iPads each year. Country A has 100 workers. Suppose a worker in Country B can make either 2 iPhones or 10 iPads each year. Country B has 200 workers. Which of the following is true?
A) In Country A, the opportunity cost of one iPhone is two iPads.
B) In Country A, the opportunity cost of one iPad is two iPhones.
C) The opportunity cost of iPads is lower in Country A than in Country B.
D) In Country B, the opportunity cost of one iPhone is two iPads.

Question

Quizplus · Accepted Answer

For Country A, the opportunity cost of one iPhone is 2 iPads (10 iPhones per worker per year ÷ 5 iPads per worker per year = 2 iPads per iPhone). 
For Country B, the opportunity cost of one iPhone is 5 iPads (10 iPads per worker per year ÷ 2 iPhones per worker per year = 5 iPads per iPhone). 
Therefore, option B is the correct answer. Option A is incorrect because it has the opportunity cost of iPads and iPhones reversed for Country A. Option C is incorrect because it compares the opportunity cost of iPads in Country A to an unknown opportunity cost in Country B. Option D is incorrect because it has the opportunity cost of iPads and iPhones reversed for Country B.

Suppose That a Worker in Country a Can Make Either