Question

Use the following scenario to answer the next eight questions: An economy has two workers, Smith and Ricardo. Each day they work, Smith can produce 4 computers or 16 smartphones, and Ricardo can produce 6 computers or 12 smartphones. The opportunity cost for Smith to produce one smartphone is ________ computer(s).

Answer 1

Answer: 0.25 computer

Explanation:

Given that,

Smith can produce = 4 computers or 16 smartphones

Ricardo can produce = 6 computers or 12 smartphones

The opportunity cost for smith to produce one smartphone is as follows:

= $\frac{Total\ computers\ can\ be\ produced}{Total\ smartphones\ can\ be\ produced}$

= $\frac{4}{16}$

= 0.25

Therefore, 0.25 computer have to be foregone to produce one smartphone.