Question

Rosa and Nick need to decide which one of them will take time off from work to complete the rather urgent task of digging postholes for their new fence. Rosa is pretty good with a post auger; she can dig the holes in 1 hour. Nick is somewhat slow; it takes him 6 hours to dig the holes. Rosa earns $120 per hour as a psychiatrist, while Nick earns $15 per hour as a cobbler. Keeping in mind that either Rosa or Nick must take time off from work to dig the holes, who has the lowest opportunity cost of completing the task?

Answer 1

Nick has lower opportunity cost.

Step-by-step explanation:

Rosa can dig holes in 1 hour.

Nick is slow and takes 6 hours to dig the holes.

Rosa earns $120 per hour.

Nick earns $15 per hour.

The opportunity cost of digging holes for Rosa is $120 that she could have earned in that 1 hour.

The opportunity cost for Nick is

= $15 × 6

= $90

It is evident that Nick has a lower opportunity cost.