If countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the accompanying production possibilities schedules.
$$\begin{array} { | c | c | c | }
\hline \text { Country } & \text { Rubber Bands } & \text { Paper Clips } \
\hline A & 40 & 80 \
\hline B & 10 & 40 \
\hline
\end{array}$$ In country A the opportunity cost of 1 paper clip is

Question

If countries A and B produce only either rubber bands or paper clips, their maximum outputs are shown in the accompanying production possibilities schedules.
$$\begin{array} { | c | c | c | } 
\hline \text { Country } & \text { Rubber Bands } & \text { Paper Clips } \
\hline A & 40 & 80 \
\hline B & 10 & 40 \
\hline
\end{array}$$ In country A the opportunity cost of 1 paper clip is

Quizplus · Accepted Answer

The opportunity cost of producing 1 paper clip in country A is the amount of rubber bands that could have been produced instead. Given that country A can produce 40 rubber bands or 80 paper clips, the opportunity cost of producing 1 paper clip is $40 / 80 = 1/2$ rubber band.

If Countries a and B Produce Only Either Rubber Bands