If the United States, at the point where it is currently producing, must give up the production of 500 bicycles (B) to produce 20 additional tractors (T) with the same resources, its opportunity cost may be expressed as:

Question

Quizplus · Accepted Answer

The opportunity cost of producing 20 additional tractors is the number of bicycles that could have been produced if they did not make tractors. In this case, the United States must give up the production of 500 bicycles to produce 20 additional tractors. Therefore, the opportunity cost of producing 20 additional tractors is 500 bicycles. This means that for every additional tractor produced, the United States gives up the opportunity to produce 25 bicycles (500 bicycles / 20 tractors = 25 bicycles/tractor). Thus, the correct expression for the opportunity cost is 1B = 1/25T.

If the United States, at the Point Where It Is