Table 2.5

Table 2.5 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.5. What is Fred's opportunity cost of making a unicycle?
A)1/3 pogo stick
B)3 pogo sticks
C)1/2 unicycle
D)1.3 pogo sticks

Question

Table 2.5
  
Table 2.5 shows the output per month of two people, Fred and Barney. They can either devote their time to making pogo sticks or making unicycles.
-Refer to Table 2.5. What is Fred's opportunity cost of making a unicycle?
A)1/3 pogo stick 
B)3 pogo sticks 
C)1/2 unicycle 
D)1.3 pogo sticks

Quizplus · Accepted Answer

Fred's opportunity cost of making a unicycle is 3 pogo sticks (as he could have made 4 pogo sticks instead). Therefore, it is most beneficial for Fred to focus on making pogo sticks, as he has a comparative advantage in producing them. Barney, on the other hand, has a lower opportunity cost for making unicycles (only 1/2 of a pogo stick), so he should focus on making unicycles. This allows both Fred and Barney to specialize in their respective areas of comparative advantage, leading to higher overall production and efficiency.

Table 2.5 Table 2.5 Shows the Output Per Month of Two People