Question

Your friend John works producing dress shirts and dress pants. Currently John can work a maximum of 8 hours per day. With the equipment he has, and the current level of expertise, he can finish either 2 shirts or 8 pairs of pants in an hour. This is true when he is performing at full capacity. Meaning doing the best possible work.

3. What is the opportunity cost of making one pair pants (in terms of the amount of shirts he won't be able to make)? As an example, when you give up $20 dollars in exchange for 40 pencils, you can say that the “cost” per pencil was $0.50, because $20/40 = $0.50. (15 points)

4. What is the opportunity cost of making one shirt (in terms of the amount of pants he won't be able to make)? (15 points)

Answer 1

Answer: The opportunity cost for making one pair of pants is making 1/4 of a shirt. The opportunity cost of making one shirt is 4 pairs of pants.

Explanation: If he can make 8 pairs of pants or 2 shirts in one our, we divide 8/8 to get 1 pair of pants. This means we would divide 2/8 to get .25 or 1/4.

For making if he can make 2 shirts or 8 pants in 1 hour. We divide 2/2 to get 1. This means we would divide 8/2 to get 4.