Question

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries

Answer 1

The true statement about the opportunity costs in the two countries is: B) the opportunity cost of producing cheese is higher in Denmark.

What is an opportunity cost?

An opportunity cost is also referred to as alternative forgone and it can be defined as the value, profit or benefits that are given up and forfeited by an individual or business firm, in order to choose or acquire something deemed most significant at the time.

In this context, we can infer and logically deduce that the true statement about the opportunity costs in the two countries is that the opportunity cost of producing cheese is higher in Denmark because it forfeits only 50 pounds of cheese.

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Complete Question:

For each watch Denmark produces, it gives up the opportunity to make 50 pounds of cheese. Germany can produce one watch for every 100 pounds of cheese it produces. Which of the following is true with regard to opportunity costs in the two countries?

A) The opportunity cost of producing watches is higher in Denmark.

B) The opportunity cost of producing cheese is higher in Denmark.

C) The opportunity cost of producing cheese is identical in both countries.

D) It is impossible to compare opportunity costs because the two countries use different currencies.

E) In both countries combined, the opportunity cost of one watch is 150 pounds of cheese.