Table 2-7

Table 2-7 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 2-7.What is Barney's opportunity cost of making a unicycle?
A)1/2 of a pogo stick
B)2 pogo sticks
C)1.75 unicycles
D)2.8 pogo sticks

Question

Table 2-7
  
Table 2-7 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 2-7.What is Barney's opportunity cost of making a unicycle?
A)1/2 of a pogo stick 
B)2 pogo sticks 
C)1.75 unicycles 
D)2.8 pogo sticks

Quizplus · Accepted Answer

Barney's opportunity cost of making a unicycle is the number of pogo sticks he could have made instead. In the table, we see that Barney can make 3 unicycles or 6 pogo sticks in a month. Therefore, his opportunity cost of making a unicycle is 2 pogo sticks (6 pogo sticks - 3 unicycles = 2 pogo sticks).

The best choice would depend on the specific needs or goals of Fred and Barney. However, if they want to maximize their output and profits, they should specialize in the product where they have a lower opportunity cost. In this case, Fred's opportunity cost of making a unicycle is 1/2 of a pogo stick (4 pogo sticks - 8 unicycles = -4 pogo sticks, divided by 8 unicycles = -0.5 pogo sticks per unicycle). Therefore, he should specialize in making unicycles, while Barney should specialize in making pogo sticks.

Table 2-7 Table 2-7 Shows the Output Per Month of Two People