Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is ________, and she should specialize in the production of ________.
A) 1/3 coconut per fish; fish
B) 2/3 coconut per fish; coconuts
C) 1 coconut per fish; fish
D) 4 coconuts per fish; fish

Question

Quizplus · Accepted Answer

Betty's opportunity cost of producing 1 fish is 1/3 coconut (since she can produce 3 fish or 1 coconut, producing 1 fish means giving up 1/3 of a coconut). Given her lower opportunity cost for fish compared to Ann, she should specialize in the production of fish.

Betty and Ann Live on a Desert Island