Question

In a month, Caleb can produce a maximum of either 30 bushels of pears or 15 bushels of apples, or any linear combination in between. Similarly, Diane can produce a maximum of either 20 bushels of pears or 5 bushels of apples, or any linear combination in between. 1st attempt Part 1 What is the opportunity cost for Caleb to produce one more bushel of apples in terms of pears? One bushel of apples equals bushels of pears. What is the opportunitycost for Diane to produce one more bushel of apples in terms of pears? One bushel of apples equals bushels of pears.

Answer 1

Answer:

One bushel of apples equals 2 bushels of pears. (opportunity cost for Caleb)

One bushel of apples equals 4 bushels of pears. (opportunity cost for Diane)

Explanation:

In this example, opportunity cost is simply calculated by dividing the maximum capacity for pears with the maximum capacity for apples. In other words, it symbolizes the loss an individual gets by opting for one decision among two options. Caleb has two times smaller opportunity cost than Diane. Therefore, if they had to specialize in producing one good, Caleb should go for apples, while Diane should go for pears.

Answer 2

The opportunity cost for Caleb to produce one more bushel of apples in terms of pears is 2.

The opportunity cost for Diane to produce one more bushel of apples in terms of pears is 4.

What does the opportunity cost?

The opportunity cost is derived by computing the maximum capacity for producing pears with a maximum capacity for producing apples.

The opportunity cost for Caleb

$\frac{30}{15} \\=2$

The opportunity cost for Diane

$\frac{20}{5} \\=4$

Hence, Caleb has smaller opportunity costs than Diane. It means in order to get specialized in producing one good, Caleb needs to forgo some units of apples and Diane has to forgo pears.  

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