Question

If producing 200 buttons and 200 safety pins

daily is a 50% split of resources, where do we
see the opportunity cost if you decide to
produce 300 buttons and 100 safety pins?
A. The opportunity cost is still at 50%.
B. The opportunity cost is in producing fewer safety pins.
C. The opportunity cost is in the inefficiency of producing to
products.
D. The opportunity cost is in the market share for buttons.

Answer 1

The correct option is - B. The opportunity cost is in producing fewer safety pins.

Step-by-step explanation:

The correct option is - B. The opportunity cost is in producing fewer safety pins.

Reason -

Initially we produce 200 buttons and 200 safety pins and there are 50% split of resources.

Now, If we produce 300 buttons and 100 safety pins and there is no change in the split of resources, then

The opportunity cost of extra 100 buttons is sale amount we would have been getting if we make that 100 safety pins.