For each watch Switzerland produces,it gives up the opportunity to produce 50 pounds of cheese.Germany can produce one watch at a cost of 100 pounds of cheese.Which of the following is true?

Question

Quizplus · Accepted Answer

According to the given information, for each watch Switzerland produces, it gives up the opportunity to produce 50 pounds of cheese. This means that the opportunity cost of producing one watch in Switzerland is 50 pounds of cheese. On the other hand, Germany can produce one watch at a cost of 100 pounds of cheese. Therefore, the opportunity cost of producing one watch in Germany is 100 pounds of cheese. Since the opportunity cost of producing cheese is lower in Switzerland (1 watch = 50 pounds of cheese) compared to Germany (1 watch = 100 pounds of cheese), it can be concluded that the opportunity cost of producing watches is lower in Switzerland. Therefore, the best choice is B.

For Each Watch Switzerland Produces,it Gives Up the Opportunity to Produce