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What is the answer to this opportunity cost?
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July 11th, 2011
First of all, I don’t really understand what opportunity cost is. I have a homework problem and I was hoping someone could please explain how it works. Answers would help but not be beneficial if it is given without explanation. Thanks!
Michael can produce 20 pizzas or 40 loaves of bread in 10 hours. Nina can produce 30 pizzas or 50 loaves of bread in 10 hours. Assume that the tradeoff rate in production is consistent.
a. What is Michael’s opportunity cost of producing a pizza?
b. Who has comparative advantage?
c.d. Describe what Nina and Michael should do to maximize their benefits?
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