Question 24
Basic ConceptsIf the production of 5 bags of rice are given up by a farmer in order to produce 1 bag of maize, this implies that, to the farmer,
- A.maize has a higher opportunity cost of production than rice.
- B.rice has a greater opportunity cost of production than maize.
- C.rice and maize have equal opportunity costs of production.
- D.both rice and maize have no opportunity costs of production.
Show the answer and explanation
Answer: A (maize has a higher opportunity cost of production than rice.)
Explanation
One bag of maize costs 5 bags of rice, while one bag of rice costs only 1/5 bag of maize, so maize has the higher opportunity cost.