Assume the macro islands can produce 25 fishing boats or 150 jars of guava jelly in one hour. the micro islands can produce 30 fishing boats or 300 jars of guava jelly in the same time period. the opportunity cost of producing 1 fishing boat in the micro islands is

10 jars of guava jelly.

Explanation:

The value or benefit that was forgone or given up when a choice is made between two alternatives is what we referred to as opportunity cost. In economics, it is called alternative forgone or real cost.

The formula for opportunity cost is given below

Opportunity cost = Value of alternative forgone/Value of alternative choosing

Value of alternative forgone     = 300 jars of guava jelly

Value of alternative choosing   = 30 fishing boats

Opportunity cost                        = 300/30

Opportunity cost                        = 10 jars of guava jelly.

Therefore the opportunity cost of producing 1 fishing boat in the Micro Islands is 10 jars of guava jelly.

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