Table 2.6 Table 2.6 shows the number of labour hours required to produce a digital camera and a pound of wheat in China and South Korea.
-Refer to Table 2.6.What is China's opportunity cost of producing one digital camera?
A)0.04 pounds of wheat
B)4 pounds of wheat
C)25 pounds of wheat
D)40 pounds of wheat

Question

Table 2.6  Table 2.6 shows the number of labour hours required to produce a digital camera and a pound of wheat in China and South Korea.
-Refer to Table 2.6.What is China's opportunity cost of producing one digital camera?
A)0.04 pounds of wheat 
B)4 pounds of wheat 
C)25 pounds of wheat 
D)40 pounds of wheat

Quizplus · Accepted Answer

China's opportunity cost of producing one digital camera is determined by how much wheat it has to give up to produce that camera. If the information in Table 2.6 suggests a trade-off between producing wheat and digital cameras, the opportunity cost is calculated by the ratio of what is given up to what is gained. Without the specific numbers from Table 2.6, the principle is that if China can produce digital cameras and wheat, the opportunity cost of one item is the inverse of the production possibility of the other. If China's production choices imply that producing one digital camera comes at the expense of 25 pounds of wheat, then the opportunity cost of one digital camera is indeed 25 pounds of wheat.

Table 26 Table 2