Question 46

In Toland, the opportunity cost of one unit of timber is ½ unit of fish.

In Toland, producing one unit of timber comes at the expense of ½ unit of fish, illustrating the concept of opportunity cost in trade.

A) ½ unit of fish

This option correctly identifies the opportunity cost of one unit of timber in Toland. When the country allocates its resources to produce timber, it forgoes the production of fish, specifically half a unit per unit of timber produced, demonstrating the trade-off involved.

B) 5 units of fish

This option is incorrect as it significantly overstates the opportunity cost. In Toland, the opportunity cost of one unit of timber is not equivalent to 5 units of fish, which suggests a misunderstanding of the comparative trade-off.

C) ½ unit of timber

This choice misrepresents the concept of opportunity cost, as it suggests that producing timber costs timber itself rather than another good. Opportunity costs are always measured in terms of alternative goods foregone, not the same good.

D) 16 units of timber

This option is incorrect because it inaccurately implies an absurdly high opportunity cost for one unit of timber. It does not reflect the actual trade-off in Toland, which is much lower, at ½ unit of fish.

Conclusion

The opportunity cost of one unit of timber in Toland is accurately represented by option A, which states it is ½ unit of fish. All other options fail to align with the economic principles of opportunity cost, either exaggerating the trade-off or misunderstanding the basic concept of comparing different goods.