Table 3-1

-Refer to Table 3-1.What is the opportunity cost of 1 kg of potatoes for the rancher?

Question

Table 3-1
 
-Refer to Table 3-1.What is the opportunity cost of 1 kg of potatoes for the rancher?

Quizplus · Accepted Answer

According to the table, the rancher can produce either 1 kg of meat or 5/4 kg of potatoes in 1 hour of labour. Therefore, the opportunity cost of 1 kg of potatoes for the rancher is 5/4 kg of meat. To make the best choice, we need to compare the opportunity cost of producing potatoes for the rancher and the farmer. The farmer can produce either 1 kg of meat or 1/2 kg of potatoes in 1 hour of labour. Therefore, the opportunity cost of 1 kg of potatoes for the farmer is 2 kg of meat. Since the opportunity cost of producing potatoes is lower for the rancher, it is more efficient for the rancher to produce potatoes and trade with the farmer for meat. Therefore, the best choice for the rancher is to produce potatoes.

Table 3-1 -Refer to Table 3-1.What Is the Opportunity Cost of 1