Table 3-2
$\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\
\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \
\hline \text { Lee } & 6 & 10 & 15 & 4 \
\hline \text { John } & 3 & 20 & 15 & 4\\hline
\end{array}$
-Refer to Table 3-2.The opportunity cost of 1 kg of butter for John is:
A)3/2 kg of rice
B)4/3 kg of rice
C)3/4 kg of rice
D)2/3 kg of rice

Question

Table 3-2
 $\begin{array}{|c|c|c|c|c|}\hline&\text { Labour hours needed to produce one unit of: }&&\text { Amount produced in } 60 \text { hours: }\
\hline & \text { Butter (kg) } & \text { Butter (kg } & \text { Rice (kg) } & \text { Rice (kg) } \
\hline \text { Lee } & 6 & 10 & 15 & 4 \
\hline \text { John } & 3 & 20 & 15 & 4\\hline
\end{array}$
-Refer to Table 3-2.The opportunity cost of 1 kg of butter for John is:
A)3/2 kg of rice
B)4/3 kg of rice
C)3/4 kg of rice
D)2/3 kg of rice

Quizplus · Accepted Answer

The opportunity cost of 1 kg of butter for John is the amount of rice he would have to give up to produce 1 kg of butter. According to the table, John can produce 2 kg of rice for every 3 kg of butter he produces. Therefore, the opportunity cost of 1 kg of butter is 3/2 kg of rice (2 kg of rice/3 kg of butter = 1 kg of rice/1.5 kg of butter = 3/2 kg of rice/kg of butter). Option B (4/3 kg of rice) is incorrect because it is the inverse of the opportunity cost (1.5/1 instead of 1/1.5).

Table 3-2 -Refer to Table 3-2