Answered: The opportunity cost of gathering…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Level 2: Opportunity Cost, Comparative Advantage, and Specialization

The opportunity cost of gathering firewood is then the calories of fish given up per log of firewood gained. (Fill in the blanks in the formula and perform the calculation).

Opportunity Cost of Gathering

cals fish

logs woo

calories per log

Fish (cals)
7000
6000
5000
4000
3000
2000
1000
0
0
10
20
30
Your PPF
Production Possibility Frontier
40
Friday's PPF
50
60
Firewood (logs)
70
80
90
Both Student and Friday's Production Point
100
110
120

Definition Video Definition Ability of a country to produce goods and services at a lower opportunity cost compared to other countries. Here, opportunity cost refers to the forgone units of one good in order to produce one more unit of another good. For example, the opportunity cost of producing good X in country A is 2Y and in country B is 1.25Y. Country B has a lower opportunity cost of producing good X than country A. Therefore, country B has a comparative advantage in the production of good X. Video

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