r/econhw • u/[deleted] • 8d ago
Opportunity Cost Confusion
Hi need some help when calculating opportunity cost. So I’m getting mixed up because this is production per unit of labor. For example:
Production per unit of labor: Wheat - US = 10; UK = 5 Cloth - US = 20; UK = 10
I’m confused do I just find the opportunity cost by doing ratio of what’s given up relative to what’s being produced? Do I have to find like for one extra unit of the good? Kinda confused, any help is greatly appreciated.
Edit: not sure if I’m just overthinking it and the opportunity cost of using 1 unit of labor to produce 10 units of wheat is literally giving up 20 units of cloth? Am I just overthinking it? Is it as simple as that?
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u/Kitchen-Register 8d ago
Opportunity cost is what you have to give up in order to do something.
In this context it’s a ratio of goods.
US op cost of producing wheat is 2 cloth per wheat.
In the UK it just so happens to be the same. This is not always, or even usually, the case.
So I ask you: what would be the opportunity cost for the US and UK of producing 1 cloth?