Question

In a given amount of time John can produce either 40 pounds of vegetables or 10 pounds of chicken. In the same amount of time George can produce either 25 pounds of vegetables or 5 pounds of chicken. In this simple economy if John and George decide to specialize and exchange with each other then we can expect one pound of chicken to trade for at least _____ pounds of vegetables but not more than_____ pounds of vegetables. Enter numerical values in each blank, rounded to two decimal places as necessary

Answer 1

Answer:

1. 3 pounds of Vegetable

2. 5 Pounds of Vegetable

Explanation:

The question requires the calculation of Opportunity costs. This is the benefit foregone or benefit that can be derived from a next best option based on an individual's current choice.

The question is to calculate the Opportunity cost for John and George espcially as regards the production of two items. The first is Chicken and the second is Vegetables. It can also be provided in a given amount of time.

We can expect one pound of chcken to trade for at least........ pounds of vegetable but not more than ............. of vegetable

One pound of chicken has the opportunity cost of ......

Step 1: How many pounds of vegetable can John produce compared to pounds of chicken?

John can produce 40 pounds of Vegetable for 10 pounds of Chicken

Therefore, 1 pound of chickedn = 40 Pounds of Vegetable/ 10 pounds of Chicken

It means 1 pound of Chicken has the opportunity cost of 4 Pounds of Vegetable for John

Step 1: How many pounds of vegetable can George produce compared to pounds of chicken?

George can produce 25 pounds of Vegetable for 5 pounds of Chicken

Therefore, 1 pound of chicked = 25Pounds of Vegetable/ 5 pounds of Chicken

It means 1 pound of Chicken has the opportunity cost of 5 Pounds of Vegetable for George