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A local sandwich shop faces the following costs of production per hour depending on how many sandwiches it makes.
Suppose that the market for sandwiches is perfectly competitive. If the market price of a sandwich is $3.50, the shop will make sandwiches per hour.
Suppose that Ron and Karen have a boutique bakery where they make only cakes and biscuits. Their daily productivity is reported in the table below.
| Cakes (kg/day) | Biscuits (kg/day) |
Ron | 4.4 | 7.6 |
Karen | 4.1 | 4.4 |
Ron’s opportunity cost of producing a kilogram of cake is kg of biscuits.
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