Question

Suppose that Paulie and Vince each can produce ice cream or t-shirts. The table shows the quantity of each good that Paulie and Vince each can produce in one hour, respectively, if they devote all of their time and effort to making the good. Ice cream T-shirts Cups) (quantity) Pauli Vinc 17 12 What is Paulie's opportunity cost of producing one cup of ice cream (round to two decimal places)? t-shirts

Answer 1

Suppose that Paulie and Vince each can produce either ice cream or t-shirts. The table below shows the quantity of each good that Paulie and Vince each can produce in one hour, respectively, if they devote all their time and effort into making the good.

Given date

	Ice-Cream (Cups)	T-Shirt Quantity
Paulie	4	17
Vince	8	12

a. Paulo's opportunity cost of producing one cup of ice cream is 4.25

Paulie can make 4 cups of ice cream or 17 t-shirts. So for 4 cups of ice cream, he has to lose 17 t-shirts. And for 1 cup of ice cream, he has to loss 4.25 t-shirts (17/4).

b. Vince's opportunity cost of producing one t-shirt is 0.67

Vince can make 8 cups of ice cream or 12 t-shirts. Therefore for 12 t-shirts, he has to lose 8 cups of ice cream. And for 1 t-shirt, he has to loss 0.67 cups of ice cream (8/12).