Use the following scenario to answer the questions that follow.
An economy has two workers, Smith and Ricardo. Every day they work, Smith can produce 4 computers or 16 smartphones, and Ricardo can produce 6 computers or 12 smartphones.
-What is the opportunity cost for Ricardo to produce one smartphone?

Question

Quizplus · Accepted Answer

The opportunity cost for Ricardo to produce one smartphone is the number of computers he has to give up. Ricardo can either produce 6 computers or 12 smartphones. If he decides to produce one more smartphone, he has to stop producing computers. Therefore, his opportunity cost for producing one smartphone is 1/2 computer.

The best choice(s) depends on the needs of the economy. However, if the economy wants to maximize the production of computers and smartphones, the best choice would be for Smith to produce smartphones (since he has a lower opportunity cost of producing them) and for Ricardo to produce computers (since he has a lower opportunity cost of producing them). Therefore, the best choice would be:

Answer: 
Smith produces 16 smartphones and Ricardo produces 6 computers. 
 This will lead to a total production of 16 + 6 = 22 units of smartphones and computers, which is higher than any other possible combination.

Use the Following Scenario to Answer the Questions That Follow