Homework SourseCalculate the opportunity cost for the production of each pr
Calculate the opportunity cost for the production of each product in each island. Which product will each Island specialize in?
Coconuts Coconuts ·0Tx 500 500 O, 1500 Fish 2500 Fish Solution
My island:
Opportunity cost of producing fish=500/1500=1/3 coconuts.
Opportunity cost of producing coconuts=1500/500=3 fish
Neighbor:
Opportunity cost of producing fish=500/2500=1/5 coconuts.
Opportunity cost of producing coconuts=2500/500=5 fish
Since my island\'s opportunity cost of producing coconuts is less than neighbour\'s opportunity cost of producing coconuts(3 fish<5 fish), so my island will specialise in producing coconuts.
Since neighbour\'s opportunity cost of producing fish is less than my island\'s opportunity cost of producing fish(1/5coconuts<1/3 coconuts), so neighbour will specialise in producing fish.
