Betty and Ann Live on a Desert Island

question 198

Multiple Choice

Betty and Ann live on a desert island. With a day's labor, Ann can produce 6 fish or 4 coconuts; Betty can produce 3 fish or 1 coconut. Betty's opportunity cost of producing 1 fish is ________, and she should specialize in the production of ________.

• A) 1/3 coconut per fish; fish
• B) 2/3 coconut per fish; coconuts
• C) 1 coconut per fish; fish
• D) 4 coconuts per fish; fish

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Definitions:

Indifference Curve

A graph showing different combinations of goods among which a consumer is indifferent.

Budget Constraint

The limitation on the consumption bundles that a consumer can afford given their income and the prices of goods and services.

Tangent

A line that touches a curve at a single point without crossing it.

Indifference Curves

Graphical representations in microeconomics illustrating different combinations of two goods that give a consumer equal satisfaction and utility.