Suppose an acre of land yields 100 bushels of corn and that one bushel of corn provides enough seed for one-quarter of an acre of land. The opportunity cost of consuming another 100 bushels of corn today is
A) 100 bushels of corn next year.
B) 25 bushels of corn next year.
C) 10 bushels of corn next year.
D) 2.5 bushels of corn next year.

Question

Quizplus · Accepted Answer

To plant one acre, you need 4 bushels of corn (since 1 bushel seeds 0.25 acres). Consuming 100 bushels today means you forgo planting 25 acres next year, which would yield 25 x 100 = 2500 bushels. Thus, the opportunity cost is 25 bushels of corn next year.

Suppose an Acre of Land Yields 100 Bushels of Corn