Figure 3-4

-Refer to Figure 3-4.The opportunity cost of 1 poem for Perry is
A) 1/12 novel.
B) 1/6 novel.
C) 2 novels.
D) 6 novels.

Question

Figure 3-4
 
-Refer to Figure 3-4.The opportunity cost of 1 poem for Perry is
A) 1/12 novel. 
B) 1/6 novel. 
C) 2 novels. 
D) 6 novels.

Quizplus · Accepted Answer

The opportunity cost is the value of the next best alternative that must be given up in order to pursue the current choice. In this case, Perry's opportunity cost of writing 1 poem is the amount of the novel he could have written instead. From the graph, we can see that if Perry writes 1 poem, he will sacrifice half his time for writing novels. Therefore, the opportunity cost of 1 poem for Perry is 1/2 novel. Simplifying 1/2 gives us the answer of B, which is 1/6 novel. So, Perry's best choice is to write 6 poems and 1/6 of the novel, which will maximize his output.

Figure 3-4 -Refer to Figure 3-4.The Opportunity Cost of 1 Poem for of 1