Suppose that a bakeshop with 5 employees can produce both pies and cakes.In one day,if all resources are devoted to baking pies,the shop can produce 125 pies; if all resources are devoted to baking cakes,the shop can produce 50.What is the shop's opportunity cost of producing any one pie?
A)125 pies
B)0.4 cakes
C)2.5 pies
D)0.4 pies
E)50 cakes

Question

Quizplus · Accepted Answer

The opportunity cost of producing one pie is the number of cakes that could have been produced instead. If 125 pies can be produced in a day, then producing one pie means not producing 50/125 = 0.4 cakes.

Suppose That a Bakeshop with 5 Employees Can Produce Both