Answer:
d)The opportunity cost of 1 lb. of coffee is 4 lbs. of bananas for Oscar.
Explanation:
a)The opportunity cost of 1 lb. of bananas is 4 lbs. of coffee for Oscar.
In order to produce 64 pounds of banana, Oscar has to give up producing 16 pounds of coffee, his opportunity cost is:
[tex]C= \frac{16}{64}= 0.25[/tex]
The statement is false.
b)Oscar has absolute advantage in the production of coffee.
Julia has a higher production capacity for coffee (20 pounds to 16 pounds) and therefore has the absolute advantage.
The statement is false.
c)Julia has comparative advantage in the production of bananas.
Julia has a higher opportunity cost for producing a pound of bananas (0.5 pounds of coffee to 0.25 pounds of coffee) and therefore does not have the comparative advantage.
The statement is false.
d)The opportunity cost of 1 lb. of coffee is 4 lbs. of bananas for Oscar.
In order to produce 16 pounds of coffee, Oscar has to give up producing 64 pounds of banana, his opportunity cost is:
[tex]C= \frac{64}{16}= 4[/tex]
The statement is true.
The opportunity cost is the foregone cost when a single alternative is chosen from different plans and alternatives. It can be said as the loss in the value or the loss of benefits that could be incurred due to engaging in the activity.
The correct statement for the given case is:
Option d) The opportunity cost of 1 lb. of coffee is 4 lbs. of bananas for Oscar.
Computation:
[tex]\begin{aligned}\text{Opportunity cost}&=\frac{\text{Units of Bananas}}{\text{Units of Coffee}}\\&=\frac{64\;\text{pounds}}{16\;\text{pounds}}\\&=4 \;\text{pounds}\end{aligned}[/tex]
Thus, for producing 16 pounds of coffee Oscar has to give up 64 pounds of bananas with the opportunity cost of 4 pounds of bananas per 1 pound of coffee.
To know more about opportunity cost, refer to the link:
https://brainly.com/question/21678384
