Jack and Jill work at a bakery. In one hour, Jack can decorate either 5 ice-cream cakes or 2 wedding cakes. In one hour, Jill can decorate either 4 ice-cream cakes or 1 wedding cake. Thus, the opportunity cost of decorating an ice-cream cake is _____ for Jack and _____ for Jill.
A) 4 wedding cakes; 2.5 wedding cakes
B) 1/4 wedding cake; 2/5 wedding cake
C) 2.5 wedding cakes; 4 wedding cakes
D) 2/5 wedding cake; 1/4 wedding cake

Question

Quizplus · Accepted Answer

The opportunity cost is the value of the next best alternative forgone. For Jack, if he decorates 5 ice-cream cakes in one hour, then the opportunity cost is the number of wedding cakes that he could have decorated in the same hour. Since he can decorate 2 wedding cakes in one hour, his opportunity cost for one ice-cream cake is 2/5 of a wedding cake. 
For Jill, if she decorates 4 ice-cream cakes in one hour, then the opportunity cost is the number of wedding cakes that she could have decorated in the same hour. Since she can decorate 1 wedding cake in one hour, her opportunity cost for one ice-cream cake is 1/4 of a wedding cake. Therefore, the answer is option D.

Jack and Jill Work at a Bakery