With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway. FIGURE 1-1 Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that
A)the opportunity cost of the highway repair is uncertain.
B)the opportunity cost of the highway repair is $0.
C)the opportunity cost of the highway repair is 4 search and rescue helicopters.
D)there is no opportunity cost involved because the government has achieved its objectives.
E)there is no opportunity cost involved because the government stayed within its budget.

Question

With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.  FIGURE 1-1 Refer to Figure 1-1.If the government chooses to allocate all $200 million to highway repair,we can say that
A)the opportunity cost of the highway repair is uncertain. 
B)the opportunity cost of the highway repair is $0. 
C)the opportunity cost of the highway repair is 4 search and rescue helicopters. 
D)there is no opportunity cost involved because the government has achieved its objectives. 
E)there is no opportunity cost involved because the government stayed within its budget.

Quizplus · Accepted Answer

Opportunity cost is the value of the next best alternative that must be given up to pursue a certain action. If the government chooses to allocate all $200 million to highway repair, they cannot also purchase the 4 helicopters. Therefore, the opportunity cost of the highway repair is 4 search and rescue helicopters. So, the best choice is to purchase the 4 helicopters.

With a Budget of $200 Million,the Government Can Choose to Purchase