This graph shows three different budget constraints: A,B,and C. If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?
A)Twelve cases of soda
B)Eight cases of soda
C)Four cases of soda
D)It is impossible to say without knowing Bert's income.

Question

This graph shows three different budget constraints: A,B,and C.  If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?
A)Twelve cases of soda 
B)Eight cases of soda 
C)Four cases of soda 
D)It is impossible to say without knowing Bert's income.

Quizplus · Accepted Answer

The opportunity cost of three gallons of milk is the amount of the other good Bert would have to give up in order to purchase three gallons of milk. On budget constraint A, we can see that Bert can purchase four cases of soda for the same amount he would spend on three gallons of milk. Therefore, the opportunity cost of three gallons of milk is four cases of soda.

This Graph Shows Three Different Budget Constraints: A,B,and C