Imagine you own a pizza place, and you had a costs $c of producing each pizza, excluding the salary to the chef (i.e. the value $c only includes the dough, toppings, wood for the oven, etc, but not the salary to the chef). There are 4 possible chefs you could hire. The first one can only make pizzas, and he has a job offer from one of your competitors (they are offering him w1 per day). The second one can also make fancy Italian dishes and has a job offer from an Italian place, worth w2 > w1 per day. The third can also cook french food, and has a job offer from a european restaurant worth w3 > w2 per day. Finally, the last chef just won the 2 ”Top Chef” show and has an offer to host a TV show which is worth w4 > w3 per day. Assume each chef can produce a maximum of 10 pizzas per day (before, say, his hands fall off) and that they all produce pizzas of equal quality. • What is the opportunity cost for each chef of working at your pizza place? • What does your daily supply curve for pizzas look like?

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Opportunity cost is the loss of potential earnings from other alternatives when one of the altern... View the full answer