Question

Suppose that paulie and vinny each can produce ice cream or t-shirts. The table shows the quantity of each good that paulie and vinny each can produce in 1 hour, respectively, if they devote all of their time and effort into making the good. Round all answers to two decimal places.

Answer 1

Paulie's opportunity cost of producing a cup of ice cream is 4 T-shirts while Vinny's opportunity cost (C) of producing a t-shirt is 0.53

How to calculate the opportunity cost

The table entries are given as:

          Ice Cream (cups) T-shirts (quantity)

Paulie 5.00                          20.00

Vinny 8.00                              15.00

Paulie's opportunity cost of producing a cup of ice cream is calculated by dividing the number of T-shirts by the cups of ice cream.

So, we have:

$C = \frac{20.00}{5.00}$

$C =4.00$

Similarly, Vinny's opportunity cost (C) of producing a t-shirt is calculated by dividing the cups of ice cream by the number of T-shirts

So, we have:

$C = \frac{8.00}{15.00}$

$C = 0.53$

Hence, Vinny's opportunity cost (C) of producing a t-shirt is 0.53

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