Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts. Ann's opportunity cost of producing 1 coconut is ________ and she should specialize in the production of ________.
A) 8 fish per coconut; fish
B) 2 fish per coconut; coconuts
C) 6 fish per coconut; coconuts
D) 0 fish per coconut; coconuts

Question

Quizplus · Accepted Answer

Ann's opportunity cost of producing 1 coconut is 2 fish (since she can produce 8 fish or 4 coconuts in a day, so for each coconut, she gives up 2 fish). Given her lower opportunity cost in producing coconuts compared to Betty, she should specialize in the production of coconuts.

Betty and Ann Live on a Desert Island