Table 2.8

Table 2.8 shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2.8. What is Ireland's opportunity cost of producing one motorcycle?
A)0.2 guitar
B)5 guitars
C)8 guitars
D)32 guitars

Question

Table 2.8
  
Table 2.8 shows the number of labour hours required to produce a motorcycle and a guitar in Ireland and Scotland.
-Refer to Table 2.8. What is Ireland's opportunity cost of producing one motorcycle?
A)0.2 guitar 
B)5 guitars 
C)8 guitars 
D)32 guitars

Quizplus · Accepted Answer

According to the table, Ireland needs to use 40 labor hours to produce one motorcycle and 200 labor hours to produce 1 guitar. Therefore, the opportunity cost of producing one motorcycle in Ireland is 200/40 = 5 guitars. This means that if Ireland produces one motorcycle, it must give up the production of 5 guitars. Thus, the best choice is to produce guitars, as the opportunity cost is lower than that of producing motorcycles.

Table 2.8 Table 2.8 Shows the Number of Labour Hours Required to of Labour