Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
He will gain all the benefits from producing both products.
B
The value of coconuts he could have produced is his opportunity cost.
C
There is no opportunity cost in this scenario.
D
Producing more palm leaves will not affect his coconut production.
Understanding the Answer
Let's break down why this is correct
Answer
When Robert decides to produce more palm leaves instead of coconuts, it means he is giving up the chance to grow coconuts. The opportunity cost is what he loses from not producing those coconuts. For example, if he could have made $100 from selling coconuts but chooses to focus on palm leaves, his opportunity cost is that $100. This shows that every choice has a cost, and in this case, it’s the value of the coconuts he didn’t produce. So, Robert needs to consider if the benefits from the palm leaves are worth the cost of the coconuts he could have made.
Detailed Explanation
When Robert makes more palm leaves, he gives up the chance to make coconuts. Other options are incorrect because This idea suggests he can benefit from both, but that's not true; This option thinks there’s no cost when switching, but there always is.
Key Concepts
Opportunity Cost
Comparative Advantage
Resource Allocation
Topic
Calculating Opportunity Costs
Difficulty
medium level question
Cognitive Level
understand
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