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Fact 2.4.1
In an eight-hour day, Andy can produce either 24 loaves of bread or 8 kilograms of butter. In an eight-hour day, Rolfe can produce either 8 loaves of bread or 8 kilograms of butter.
-Given Fact 2.4.1, the opportunity cost of producing 1 loaf of bread is
A)20 minutes (1/3 hour)for Andy and 1 hour for Rolfe.
B)1/3 kilogram of butter for Andy and 1 kilogram of butter for Rolfe.
C)3 kilograms of butter for Andy and 1 kilogram of butter for Rolfe.
D)8 kilograms of butter for both Andy and Rolfe.
E)not calculable from the given information.

Question

Quizplus · Accepted Answer

The opportunity cost of producing 1 loaf of bread is the amount of butter that could have been produced instead. Therefore, for Andy, it is 1/3 kilogram of butter (since he can produce 8 kilograms of butter or 24 loaves of bread in 8 hours) and for Rolfe, it is 1 kilogram of butter (since he can produce 8 kilograms of butter or 8 loaves of bread in 8 hours).

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