A nation can manufacture either 10 units of product A or 4 units of product B. What is the opportunity cost of producing one unit of product B?

Explanation

The opportunity cost of producing one unit of product B is calculated by dividing the maximum production of product A by the maximum production of product B. Since the country can produce 10 units of A or 4 units of B, the opportunity cost of 1 unit of B equals 10 ÷ 4 = 2.5 units of A.