Final answer:
The opportunity cost of one lumber is based on the forgone production of another good, like oil. Canada has a lower opportunity cost in producing lumber compared to Venezuela. For the small nation's GDP calculation, only the value of final goods, which is $250 worth of bookshelves, is included.
Step-by-step explanation:
Understanding Opportunity Cost in Economics
Opportunity cost is a fundamental concept in economics that refers to the value of the next-best alternative when a choice is made. It's what is forgone as a result of making a decision. The opportunity cost of producing one unit of a good can be calculated by considering the alternative uses of the resources used for its production. For example, if you have the resources to produce either 40 lumber or 20 barrels of oil, the opportunity cost of one lumber is equivalent to half a barrel of oil (1/2 oil), because for every lumber produced, you are giving up the opportunity to produce 1/2 barrel of oil.
In the case of Canada and Venezuela, we compare the opportunity costs of one lumber in both countries. In Canada, where 40 lumber equals 20 oil, the opportunity cost of one lumber is 1/2 oil. In contrast, in Venezuela, where 30 lumber equals 60 oil, one lumber's opportunity cost is two oil. This comparison shows that Canada has the lower opportunity cost for producing lumber.
Calculating GDP through Final Goods
To calculate a nation's Gross Domestic Product (GDP), we only consider the value of final goods and services produced. Using the information provided about the small nation, we would sum the value of final goods such as the $250 worth of bookshelves. Since the trees and lumber are intermediate goods, their costs are already encapsulated in the final product's value. Thus, the nation's GDP from these products would be $250, representing the value of the final goods produced.