Question

Suppose that Oscar and Felix are roommates and they want to find a way to divide up household chores—cooking meals and doing laundry. It takes Oscar 45 minutes to make a meal and 90 minutes to do a load of laundry. It takes Felix 60 minutes to make a meal and 60 minutes to do a load of laundry.

(a) Oscar’s opportunity cost of doing a load of laundry is meals.

(b) Felix’s opportunity cost of doing a load of laundry is dinners.

If Oscar and Felix trade, one load of laundry should trade for more than (a) meal(s) but fewer than (b) meal(s).

Answer 1

a) Oscar’s opportunity cost of doing a load of laundry is (90/45 ) = 2 meals.

Reason: the opportunity cost of doing a load of laundry is the time forgone by making meals.

(b) Felix’s opportunity cost of doing a load of laundry is (60/60) = 1 dinners.

Reason: the opportunity cost of doing a load of laundry is the time forgone by making meals.

If Oscar and Felix trade, one load of laundry should trade for more than (a) 1 meal(s) but fewer than (b) 2 meal(s).

Thanks!