Question

For Oscar, what is the opportunity cost of producing 1 pound of coffee? (add only number) pounds of bananas Oscar and Julia can both produce either bananas or coffee. Oscar can produce either 16 pounds of coffee and 0 pounds of bananas or 64 pounds of bananas and O pounds of coffee. Julia can produc elther 20 pounds of coffee and O pounds of bananas or 40 pounds of bananas and O pounds of coffee. (Round your answers to two decimal places, where appropriate) Submit Do you know the answer? I know it Think so No idea

Answer 1

Oscar and Julia can both produce either bananas or coffee. Oscar can produce either 16 pounds of coffee and 0 pounds of bananas or 64 pounds of bananas and 0 pounds of coffee. Julia can produce either 20 pounds of coffee and 0 pounds of bananas or 40 pounds of bananas and 0 pounds of coffee. The opportunity cost is the cost of next best alternative or the cost of missed opportunity. For Oscar, opportunity cost of producing 1 pound of coffee is: Opoortunity Cost - Loss Gain 64 16 = 4 pounds of bananas When you see a production possibilities frontier (PPF) drawn as a straight line, the opportunity cost of one good or service is assumed to be constant. Hence, option A is correct.