Suppose that a worker in Country A can produce either 25 bananas or 5 tomatoes each year. Country A has 200 workers. Suppose a worker in Country B can produce either 18 bananas or 6 tomatoes each year. Country B has 400 workers. The opportunity cost of one tomato is:

Question

Quizplus · Accepted Answer

To calculate the opportunity cost of one tomato, we need to look at how many bananas one tomato is worth in each country.

In Country A, one tomato is worth 5 bananas (since a worker can produce either 25 bananas or 5 tomatoes).

In Country B, one tomato is worth 3 bananas (since a worker can produce either 18 bananas or 6 tomatoes).

Therefore, the opportunity cost of one tomato is higher in Country A than Country B, since giving up the production of one tomato means giving up the production of 5 bananas in Country A, but only giving up 3 bananas in Country B.

Suppose That a Worker in Country a Can Produce Either