Chinese Dumplings - To Make Or Buy?
Subject Opportunity Cost
Topic Scarcity, Choice, and Opportunity Cost
Key Words Quality, Equipment, Sales, Consumers, Workers, Machines, Substitutes, Cost
News Story

It used to be that Chinese dumplings (or pot-stickers) - those small balls of meat and vegetables wrapped in thin pasta-like skin - could only be eaten in Chinese restaurants or homes. The frozen versions tended to be of poor quality and might fall apart. Now better equipment has enabled families to put dumplings on the table as they might pizza. Sales are increasing 10 percent a year, and it is estimated that Chinese families buy one or two bags each week.

Consumers like frozen dumplings because they save time. Even restaurant workers can wrap only 200 dumplings in an hour, and then they need to cook them. Frozen dumplings can be boiled or pan-fried in a matter of minutes. They cost about $8 for a pack of 50 in major grocery chains, a little less in Asian groceries. Still, some prefer the home-made version because they can choose a wider variety of fillings, and can make the skin thinner and to their liking. Others simply enjoy cooking and upholding an ancient tradition.

Some machines that produce these close substitutes for hand-made dumplings cost approximately $160,000, and can produce 18,000 dumplings an hour. Smaller models cost $70,000 and produce 4,000 dumplings every hour.

(Updated May 1, 2001)

1. a) How would you define opportunity cost?
b) How is opportunity cost different from out-of-pocket (or direct) costs?
2. What is the opportunity cost of a person
a) making his or her own Chinese dumplings?
b) buying Chinese dumplings on a regular weekly trip to the store?
3. Given your answers in Question 2, why might some buy their dumplings while others make their own? Be specific.
Source Shirley Leung and Masayoshi Kanabayashi, "Machines Make Dumplings an Alternative to Pizza," The Wall Street Journal, April 5, 2001.

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