Missouri can produce 10,000 tons of pecans per year or 5,000 tons of pears per year. Washington can produce 12,000 tons of pecans per year or 48,000 tons of pears per year. Which of the following statements about opportunity cost is CORRECT?

Question

Quizplus · Accepted Answer

The opportunity cost of producing one good is the amount of the other good that must be given up. For Missouri, producing 1 ton of pecans means giving up 1/2 ton of pears (5,000 tons of pears / 10,000 tons of pecans), and producing 1 ton of pears means giving up 2 tons of pecans (10,000 tons of pecans / 5,000 tons of pears). For Washington, producing 1 ton of pecans means giving up 4 tons of pears (48,000 tons of pears / 12,000 tons of pecans), and producing 1 ton of pears means giving up 1/4 ton of pecans (12,000 tons of pecans / 48,000 tons of pears). Thus, both B and C correctly describe the opportunity costs for Missouri and Washington.

Missouri Can Produce 10,000 Tons of Pecans Per Year or 5,000