Question

opportunity cost—production exercise 1 (algo)
the table below presents the choices faced by a feudal lord in ancient china.
feudal chinas production possibilities
terracotta statues porcelain vases
15 25
14 35
13 45
12 55
11 65
what is the opportunity cost of producing the 12th terracotta statue?
○ 30 porcelain vases
○ 15 porcelain vases
○ 10 porcelain vases
○ 20 porcelain vases

Explanation:

Step1: Identify relevant production levels

To find the opportunity cost of the 12th terracotta statue, we compare the output levels when producing 11 statues and 12 statues.

• At 11 terracotta statues: 65 porcelain vases
• At 12 terracotta statues: 55 porcelain vases

Step2: Calculate the opportunity cost

Opportunity cost is the difference in porcelain vases given up to produce one more terracotta statue.
$\text{Opportunity Cost} = 65 - 55 = 10$

Answer:

10 porcelain vases