suppose that ned can produce either potato chips or computer chips. if he only produces potato chips he can…

suppose that ned can produce either potato chips or computer chips. if he only produces potato chips he can produce 12 in a day. if he only produces computer chips, he can produce 16 in a day. drag the endpoints of the line to plot his production possibilities frontier (ppf) on the graph. what is the opportunity cost of computer chip production in terms of potato chips? 16 2 3/4 4/3 1/2 12

suppose that ned can produce either potato chips or computer chips. if he only produces potato chips he can produce 12 in a day. if he only produces computer chips, he can produce 16 in a day. drag the endpoints of the line to plot his production possibilities frontier (ppf) on the graph. what is the opportunity cost of computer chip production in terms of potato chips? 16 2 3/4 4/3 1/2 12

Answer

Explanation:

Step1: Recall opportunity - cost formula

Opportunity cost of producing one good in terms of another = $\frac{\text{Quantity of good forgone}}{\text{Quantity of good produced}}$

Step2: Identify quantities

Ned can produce 12 potato chips if he produces no computer chips and 16 computer chips if he produces no potato chips. To produce 1 computer chip, the number of potato - chips he has to give up is calculated as follows. Let $PC_p$ be the quantity of potato chips and $PC_c$ be the quantity of computer chips. The opportunity cost of a computer chip in terms of potato chips is $\frac{PC_p}{PC_c}$. When $PC_c = 16$ and $PC_p=12$, for 1 computer chip, the opportunity cost is $\frac{12}{16}=\frac{3}{4}$.

Answer:

C. 3/4