Consider a consumer choosing between two goods, food and gasoline. Suppose her monthly income is $1500 and the average price of food per unit is $30. The price of gasoline per liter is $50. What is the opportunity cost of food?
The opportunity cost can be defined that the benefit that a person or firm misses out on when selecting one alternative over another. The opportunity cost mainly arises because of the scarcity of resources.
Answer and Explanation: 1
The opportunity cost of a budget line is the slope of the budget line which is the ratio of prices of both goods. Therefore, the opportunity cost of...
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fromChapter 1 / Lesson 6
Learn what is opportunity cost, including the opportunity cost definition, assessment and examples. See how to calculate opportunity cost using the formula.