Instead of Sara and Rob assume that we are looking at two countries. Saratovia and Rohland. Like all countries, Saratovia and hobland have limited resources to use in pro ducing goods and services. People in both coun tries have decided to use their resources to Dro duce two goods: peanuts and cheese. Assume that a Saratovian. working for one dav, can pro duce either 60 pounds of peanuts or 30 pounds of cheese. A Roblander. working for one day, can produce either 30 pounds ot peanuts or 14 pounds of cheese pounds of cheese 1. COST Economists think of cost as what is given up when one good is produced instead of another: For example, if people in Robland produce 30 pounds of peanuts, they give up producing 12 pounds of cheese. So in Robland the cost of 3u pounds of peanuts is 12 pounds of cheese. Since the cost of 12 pounds of cheese = 30 pounds of peanuts in Robland. to find the cost of 1 pound of cheese divide both 12 and 30 by 12. Therefore, in Robland the cost of I pound of cheese = 2% pounds of peanuts. Since the cost of 12 pounds of cheese = 30 pounds of peanuts in Robland. to find the cost of 1 pound of peanuts divide both 12 and 30 by 30. Therefore, in Robland the cost of I pound of peanuts is 2/5 (40%) of a pound of cheese. Now you calculate the cost of cheese and peanuts in Saratovia: The cost of 30 pounds of cheese in Saratovia pounds of peanuts. The cost of I pound of cheese in Saratovia 15 pounds of peanuts The cost of 1 pound of peanuts in Saratovia is pounds of cheese