Use the following scenario to answer the questions that follow.
Karl and Pete produce cars and trucks. Karl can produce 10 cars per hour or 5 trucks per hour. Pete can produce 12 cars per hour or 4 trucks per hour.
-Based on the scenario,Karl's opportunity cost of one car is ________ truck(s).

Question

Quizplus · Accepted Answer

Karl's opportunity cost of one car is the amount of trucks he could have produced in the time it takes him to make a car. In one hour, Karl can make 10 cars or 5 trucks. Therefore, his opportunity cost of one car is 1/2 truck (5 trucks / 10 cars).

As for the best choice(s), it depends on what they are trying to produce more of or what their goals are. If they are trying to maximize the number of cars produced, then they should have Karl focus on making cars while Pete makes trucks. If they are trying to maximize the number of trucks produced, then the opposite should be done. Additionally, they could split their production to have both cars and trucks, depending on demand for each.

Use the Following Scenario to Answer the Questions That Follow