The opportunity cost to Becky of producing 20 units of butter is
A) one gun.
B) one hour.
C) one hour and four guns.
D) four guns.
E) either one hour or four guns.

Question

Quizplus · Accepted Answer

The question does not provide any information regarding alternative goods that Becky could produce instead of butter. Therefore, we cannot calculate the opportunity cost in terms of another good. However, we can calculate the opportunity cost in terms of the factors of production used to produce butter. Becky would have to use some combination of labor and resources (such as land, cows, etc.) to produce the 20 units of butter. The opportunity cost of producing butter is the alternative goods or services that could have been produced with those same inputs. In this case, we cannot determine the exact opportunity cost without further information. However, we do know that producing one gun takes more resources and time than producing one unit of butter. Therefore, the opportunity cost of producing 20 units of butter could be either one hour of labor or four guns (assuming that one hour of labor can produce one gun). Hence, the best choice is E, which states that the opportunity cost of producing 20 units of butter is either one hour or four guns.

The Opportunity Cost to Becky of Producing 20 Units of Butter