Question

Suppose that in the United States 10 million roses could be produced with the same resources as 100,000 computers. Suppose that in Colombia 10 million roses could be produced with the same resources as 30,000 computers. Who has a lower opportunity cost of producing roses? Who has a lower opportunity cost of producing computers?

Answer 1

The opportunity cost of production =maximum production of other good/ maximum production of the good

The opportunity cost of production of roses for the US=100000/1000000=0.1 computers

The opportunity cost of production of roses for Colombia =30000/1000000=0.03 computers

The opportunity cost of production of Computers for the US=1000000/100000=10 roses

The opportunity cost of production of Computers for Colombia =1000000/30000=33.3333333=33.33 roses

Colombia has a lower opportunity cost of producing roses.

The US has a lower opportunity cost of producing computers.