Question

14) Use the following table to answer the question below. Jane's Production Possibility Schedule Pounds of Green Beans Pounds of Corn 0 80 20 60 4040 60 20 80 0 1 pound(s) of corn. Jane's opportunity cost of producing 1 pound of green beans is A)4 B) 2 C)1 D) 1/2

Answer 1

Answer:

C). 1

Explanation:

Opportunity cost is the loss in one activity due to you choosing another. Here in this case of production, opportunity cost of producing 1 pound of green beans is the production foregone of corn.

It is clear from the table that as production of green beans increases the production of corn decreases, if we look at the numbers then it is clear that when green bin is increased from 0 to 20 the pounds of corn decreases by 20 i.e. from 80 to 60.

Each step further increase in 20 pounds of green beans decreases pounds of corn by 20. Thus when pounds of green beans reaches 80 , then pounds of corn decreases to 0.

So we can see that for each unit increase in pounds of green beans decreases same amount of pounds of corn.i.e. in order to produce 1 pound extra green bean it reduces the production of corn by one pound.

This is opportunity cost of one pound green bean.