James can produce either a combination of 30 bow ties and 40 neckties or a combination of 40 bow ties and 20 neckties. If he now produces 40 bow ties and 20 neckties, what is the opportunity cost of producing an additional 20 neckties?

Question

Quizplus · Accepted Answer

The opportunity cost of producing an additional 20 neckties is the number of bow ties James would have to give up to produce those neckties instead.

To find this, we can compare the two production possibilities:

First option: 30 bow ties and 40 neckties 
Second option: 40 bow ties and 20 neckties

If James produces 20 neckties using the first option, he would produce:
20/40 * 30 = 15 bow ties

This means that the opportunity cost of producing 20 neckties using the second option is 15 bow ties. Therefore, if James produces 40 bow ties and 20 neckties, he gives up the opportunity to produce 15 additional bow ties.

James Can Produce Either a Combination of 30 Bow Ties