FIGURE 1- 1
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.

-Refer to Figure 1- 1.For the government,the opportunity cost of one kilometre of highway repair is

Question

FIGURE 1- 1
With a budget of $200 million,the government can choose to purchase 4 helicopters or repair 200 km of highway.
 
-Refer to Figure 1- 1.For the government,the opportunity cost of one kilometre of highway repair is

Quizplus · Accepted Answer

The opportunity cost of one kilometer of highway repair is the value of the next best alternative, which is 1/50 of a search and rescue helicopter. This is because the government can either purchase 4 helicopters or repair 200 km of highway with its budget of $200 million. Therefore, the cost of each helicopter is $50 million, and the opportunity cost of repairing one kilometer of highway instead of purchasing a helicopter is $50 million divided by 200 km, which equals $250,000 or 1/50 of a helicopter.

The best choice depends on the government's priorities and needs. If the government values search and rescue capabilities more than highway repair, it should choose to purchase 4 helicopters. However, if it values infrastructure and transportation more, it should choose to repair 200 km of highway.

FIGURE 1- 1 with a Budget of $200 Million,the Government Can Choose to Can