Question
During the mid-1980s, the lumber industry announced that a cord of wood (a 4-by-4-by-8 foot pile) could be converted into 942 one-pound books, 2,000 pounds
During the mid-1980s, the lumber industry announced that a cord of wood (a 4-by-4-by-8 foot pile) could be converted into 942 one-pound books, 2,000 pounds of paper, 61,370 number 10 envelopes, or 7,500,000 toothpicks.
Measure the opportunity cost of books in terms of "toothpicks forgone." Given the data above, the opportunity cost of a book is 7,500,000/942 = 7,961 toothpicks per book. Suppose that a technological advance in the toothpick industry (perhaps a waste-reducing technique) enables more toothpicks, say 9,000,000, to be created from a cord of wood
Question: What happens to the opportunity cost of producing a book when productivity increases in the toothpick manufacturing industry?
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