Consider this economic scenario: Ford Motor Company needs to make a decision on its production for 2010. The Ford Motor Company can produce 100,000 automobiles or 50,000 trucks in the course of one hour at the same cost. However, with sales down, it needs to make a decision on which of these products to focus on. What is the opportunity cost per hour of focusing on producing only trucks?

Question

Consider this economic scenario: Ford Motor Company needs to make a decision on its production for 2010. The Ford Motor Company can produce 100,000 automobiles or 50,000 trucks in the course of one hour at the same cost. However, with sales down, it needs to make a decision on which of these products to focus on. What is the opportunity cost per hour of focusing on producing only trucks?

Responses

50,000 automobiles
50,000 automobiles

100,000 automobiles
100,000 automobiles

The cost is the same either way.
The cost is the same either way.

none of the above

Answer 1

The opportunity cost per hour of focusing on producing only trucks is 50,000 automobiles. This is because Ford Motor Company could have produced 50,000 automobiles in the same amount of time instead of producing trucks.