Question

Grant has 4 hours of time in all to divide between studying for a physics exam and a geology exam. Table 1 shows his estimates of the grades (on a scale of o to 100) that he could eam from studying a particular number of hours on each subject. If he plans on spending two hours studying physics and two hours on geology, what would be his opportunity cost of an additional hour studying physics? Hours studying Table 1 Physics score 40 Geology score 30 O 50 60 A WN 85 90 90 100 (a) (6) (c) (d) (e) 10 points on his geology exam 20 points on his geology exam 30 points on his geology exam 25 points on his physics exam 85 points on his physics exam

Answer 1

Option b

By studying 2 hours on physics, 60 points on exam can be scored

By studying 2 hours on geology, 80 points on exam can be scored

Now if he plans 1 hour extra on physics, 1 hour geology needs to be forgone which is 20 points on geology (80-60)

Option c

	Corn	Potatoes	Opp cost of Corn	Opp cost of Potatoes
US	4	2	0.5 units of potatoes = (2/4)	2 units of corn = (4/2)
Mexico	4	4	1 units of potatoes = (4/4)	1 units of corn = (4/4)

From the above table we can observe that US needs to forgo 0.5 units of potatoes when compared with Mexico of 1 units of potatoes

Whereas Mexico needs to forgo 1 units of corn when compared with 2 units of corn of US