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) there is no opportunity cost involved because the government has achieved its objectives.
C) there is no opportunity cost involved because the government stayed within its budget.
D) the opportunity cost of the highway repair is 4 search and rescue helicopters.
E) the opportunity cost of the highway repair is $0.

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) there is no opportunity cost involved because the government has achieved its objectives. 
C) there is no opportunity cost involved because the government stayed within its budget. 
D) the opportunity cost of the highway repair is 4 search and rescue helicopters. 
E) the opportunity cost of the highway repair is $0.

Quizplus · Accepted Answer

The best choice would be for the government to purchase 4 helicopters. This is because there is an opportunity cost involved in choosing to repair the highway with the entire $200 million budget. The opportunity cost is the value of the next best alternative that must be forgone in order to pursue a certain action. In this case, the opportunity cost of repairing the highway instead of purchasing helicopters is 4 search and rescue helicopters. Therefore, the government should choose to purchase the helicopters to maximize its resources and achieve its objectives.

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