Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month. FIGURE 1-3
-Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is
A)1/4 of a regular coffee.
B)1/4 of a latte.
C)8 regular coffees.
D)80 regular coffees.
E)4 regular coffees.

Question

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her in each month.  FIGURE 1-3
-Refer to Figure 1-3.For Madeleine,the opportunity cost of one latte is
A)1/4 of a regular coffee. 
B)1/4 of a latte. 
C)8 regular coffees. 
D)80 regular coffees. 
E)4 regular coffees.

Quizplus · Accepted Answer

The opportunity cost of one latte for Madeleine is the amount of regular coffees she has to give up to produce one more latte. If Madeleine can produce 4 lattes instead of 16 regular coffees, then the opportunity cost of one latte is 4 regular coffees (16/4 = 4).

Madeleine Allows Herself $100 Per Month for Purchasing Coffee