Earth Movers and Shakers operates 3 iron ore mines. This table shows their daily production rates given the number of miners at each mine. All of the miners work for the same wage.
mine-----------tons---- # of miners
mother lode------100-------25
scraping bottom---30-------10
middle drift-------75-------15
The opportunity cost of moving one miner from Mother Lode to Scraping Bottom is?
2 Tons.
3 Tons.
4 Tons.
1 Ton.
The correct answer is: cannot be determined with the information given.
However, if you assume that the marginal output of miner is equal to the average output (a tall assumption in my opinion), then you can answer. The average output per minor at mother lode is 4 tons, the average at scraping bottom is 3. So, moving one miner would mean giving up 4 tons to get 3 tons. Cost = 1 ton.
To find the opportunity cost of moving one miner from Mother Lode to Scraping Bottom, we need to compare the change in production at Mother Lode with the change in production at Scraping Bottom.
The change in production at Mother Lode if one miner is moved to Scraping Bottom can be calculated as follows:
New production at Mother Lode = Current production at Mother Lode - Production per miner at Mother Lode
= 100 - 25
= 75 tons
The change in production at Scraping Bottom if one miner is moved from Mother Lode can be calculated as follows:
New production at Scraping Bottom = Current production at Scraping Bottom + Production per miner at Mother Lode
= 30 + 25
= 55 tons
Therefore, the change in production at Scraping Bottom is 55 - 30 = 25 tons.
The opportunity cost of moving one miner from Mother Lode to Scraping Bottom is the difference in production between the two mines, which is 25 tons.
So, the correct answer is: 25 Tons.
To calculate the opportunity cost of moving one miner from Mother Lode to Scraping Bottom, we need to compare the change in production at Mother Lode to the change in production at Scraping Bottom.
The production at Mother Lode per miner is 100 tons/25 miners = 4 tons per miner.
The production at Scraping Bottom per miner is 30 tons/10 miners = 3 tons per miner.
If we move one miner from Mother Lode to Scraping Bottom, the production at Mother Lode will decrease by 4 tons, as one miner is responsible for producing 4 tons.
On the other hand, the production at Scraping Bottom will increase by 3 tons since there will be one additional miner.
Therefore, the opportunity cost of moving one miner from Mother Lode to Scraping Bottom can be calculated as the difference in production between the two mines, which is 4 tons - 3 tons = 1 ton.
Hence, the opportunity cost of moving one miner from Mother Lode to Scraping Bottom is 1 ton.