In an economy that produces only popcorn and tractors, which statement best describes the opportunity cost of an additional tractor?

Question

Quizplus · Accepted Answer

Opportunity cost refers to the value of the best alternative forgone, in this case, the value of popcorn that must be given up to produce one more tractor. Therefore, option B is the correct answer. Option A talks about the cost of the new tractor, which is not the opportunity cost. Option C is just the price of popcorn and not the opportunity cost. Option D talks about the difference in value gained from the tractor and popcorn given up, which is not exactly the opportunity cost.

In an Economy That Produces Only Popcorn and Tractors, Which