Fran and Mike operate a cupcake store, where they make and decorate the cupcakes. They are deciding who should make the cupcakes and who should decorate the cupcakes to minimise opportunity cost. Make (cupcakes/hr) Decorate (cupcakes/hr) Fran 20 12 Mike 24 16 Which of the following statements are true: a)For Fran, the opportunity cost of decorating 1 cupcake is making 1.67 (to two decimal places) cupcakes. b)For Mike, the opportunity cost of making 1 cupcake is decorating 1.5 cupcakes. c)Mike should specialise in decorating cupcakes. d)Fran has an absolute advantage in decorating cupcakes.
Fran and Mike operate a cupcake store, where they make and decorate the cupcakes. They are deciding who should make the cupcakes and who should decorate the cupcakes to minimise opportunity cost. Make (cupcakes/hr) Decorate (cupcakes/hr) Fran 20 12 Mike 24 16 Which of the following statements are true: a)For Fran, the opportunity cost of decorating 1 cupcake is making 1.67 (to two decimal places) cupcakes. b)For Mike, the opportunity cost of making 1 cupcake is decorating 1.5 cupcakes. c)Mike should specialise in decorating cupcakes. d)Fran has an absolute advantage in decorating cupcakes.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Fran and Mike operate a cupcake store, where they make and decorate the cupcakes. They are deciding who should make the cupcakes and who should decorate the cupcakes to minimise opportunity cost .
Make
(cupcakes/hr)
Decorate
(cupcakes/hr)
Fran
20
12
Mike
24
16
Which of the following statements are true:
a)For Fran, the opportunity cost of decorating 1 cupcake is making 1.67 (to two decimal places) cupcakes.
b)For Mike, the opportunity cost of making 1 cupcake is decorating 1.5 cupcakes.
c)Mike should specialise in decorating cupcakes.
d)Fran has an absolute advantage in decorating cupcakes.
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