Scenario: With her available resources, Wendy can produce 20 greeting cards or 10 earrings. Sarah, with the resources she has, can produce 5 greeting cards or 15 earrings.
-Refer to the scenario above.What is Wendy's opportunity cost of producing one earring?
A) 0.33 greeting cards
B) 0.50 greeting cards
C) 1 greeting card
D) 2 greeting cards

Question

Quizplus · Accepted Answer

Wendy's opportunity cost of producing one earring is the amount of greeting cards she has to give up to produce that earring. Since she can produce 20 greeting cards or 10 earrings, for each earring produced, she gives up 20/10 = 2 greeting cards.

Scenario: with Her Available Resources, Wendy Can Produce 20 Greeting