A small landscaping firm purchases a tractor that,in one day,is capable of drilling 60 fence-post holes or removing 12 tree stumps (or some intermediate combination).For this landscaper,what is the opportunity cost of removing one extra tree stump?
A)1/12th of the cost of the tractor
B)1/5 of the cost of the tractor
C)drilling 12 fence-post holes
D)drilling 5 fence-post holes
E)There is no opportunity cost.

Question

Quizplus · Accepted Answer

The opportunity cost of removing one extra tree stump is the number of fence-post holes that could have been drilled instead. Since the tractor can drill 60 fence-post holes in one day and remove 12 tree stumps in one day, the opportunity cost of removing one extra tree stump is 60/12 = 5 fence-post holes. Therefore, the best choice is D.

A Small Landscaping Firm Purchases a Tractor That,in One Day,is