Question

Consider the scenario to answer the following questions: Two friends, Monica and Chandler, enjoy baking bread and making apple pies. Monica takes two hours to bake 1 loaf of bread and one hour to make 1 pie. Chandler takes four hours to bake 1 loaf of bread and four hours to make 1 pie. What is Monica’s opportunity cost of baking 1 loaf of bread?

Answer 1

Answer: 2 Apple Pies.

Step-by-step explanation:

As you may well know, the OPPORTUNITY COST of doing something is the gain you would have gotten if you did an alternative.

In this scenario therefore we will be simply answering that Monica would have done if she wasn't making 1 loaf of bread.

Monica takes 2 hours to bake a loaf of bread and 1 hour to bake a pie.

So what would happen if Monica had 2 hours free because she didn't make a loaf of bread?

If it takes just an hour to make an apple pie, Monica now has 2 spare hours so she will be able to make 2 Pies.

Therefore Monica's opportunity cost of making a loaf of bread is 2 Pies.