The United States must give up the production of 1,000 bicycles to produce 200 additional lawn mowers. The opportunity cost of producing 100 bicycles is _____ lawn mower(s).

Question

Quizplus · Accepted Answer

The opportunity cost of producing 1 lawn mower is 5 bicycles (since 1,000 bicycles give up 200 mowers, and 1,000/200 = 5). Therefore, the opportunity cost of producing 100 bicycles is 5 x 100 = 500 bicycles. To produce 100 bicycles, the US gives up the opportunity to produce 20 lawn mowers (since 500 bicycles represent the production of 100 bicycles 5 times, and 5 x 20 = 100). Therefore, the opportunity cost of producing 100 bicycles is 20 lawn mowers.

The United States Must Give Up the Production of 1,000