Opportunity Cost and Production Methods

This video tutorial explains a fail-safe method for calculating opportunity cost using three steps: calculating the difference, writing the opportunity cost sentence, and dividing to find the cost per unit. The method is demonstrated using a production possibilities frontier (PPF) and an alternative format with Jill and Tom. The tutorial emphasizes the importance of writing the sentence and dividing correctly to avoid errors.

What are the three main steps in the fail-safe method for calculating Opportunity Cost?

• Calculate the Difference, Write the Sentence, Divide

• Identify the Goods, Calculate the Cost, Write the Conclusion

• List the Resources, Calculate the Output, Divide the Result

• Identify the Opportunity, Write the Equation, Solve the Problem

When calculating the difference between production points, what is the difference in chairs when moving from point A to B?

• 0 chairs

• 10 chairs

• 5 chairs

• 15 chairs

How do you express the opportunity cost of 10 TVs in terms of chairs?

• The opportunity cost of 10 TVs is 10 chairs

• The opportunity cost of 10 TVs is 0 chairs

• The opportunity cost of 10 TVs is 5 chairs

• The opportunity cost of 10 TVs is 20 chairs

What is the opportunity cost of one TV in terms of chairs?

• 1/4 chair

• 1 chair

• 2 chairs

• 1/2 chair

If you reverse the calculation, what is the opportunity cost of one chair in terms of TVs?

• 2 TVs

• 1/2 TV

• 5 TVs

• 1 TV

In a different format, if Jill can produce 5 chairs or 3 TVs per hour, what is the opportunity cost of 5 chairs?

• 1 TV

• 3 TVs

• 5 TVs

• 2 TVs

For Jill, what is the opportunity cost of one chair in terms of TVs?

• 2/5 TV

• 3/5 TV

• 1/5 TV

• 1 TV

For Tom, if he can produce 10 chairs or 2 TVs per hour, what is the opportunity cost of 10 chairs?

• 1 TV

• 10 TVs

• 5 TVs

• 2 TVs

What is the opportunity cost of one chair for Tom in terms of TVs?

• 1/5 TV

• 1/2 TV

• 1 TV

• 2 TVs

What is the opportunity cost of 3 TVs for Jill in terms of chairs?

• 2 chairs

• 3 chairs

• 5 chairs

• 10 chairs