Answer to Question #260908 in Microeconomics for Nonney

Question

Johnson and Johnson (J&J) provides mothers with safe and clinically proven mild baby

products. Amongst other products they also provide Listerine products. Due to the lack in sales

of the baby products, Johnson and Johnson decided to decrease the production of baby products

and increase the production of Listerine. Illustrate on a graph and explain the opportunity cost

of producing Listerine products.

Answer 1

Producing Listerine products for Johnson & Johnson means that the company gave priority to Listerine products over baby products. More effort, time and resources will therefore be channeled to producing Listerine. The decision to reduce production of baby products for Johnson and Johnson lies in the fact that the resources of time, energy and utility are taken elsewhere that is more productive.

The diagram below shows Good Y as Listerine Products while Good x as baby products. By producing Listerine the companys' goals are attainable taking baby products time, effort and operating costs.