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opportunity cost

opportunity cost questions and answers

Learn about opportunity cost at the number one young investor website Teen Analyst.

Q: How do you calculate opportunity cost?
Maya farms a 40-acre farm. She can grow 30 bushels of corn per acre or 60 bushels of wheat per acre, and any combination in between. In bushels of wheat, what is Maya's opportunity cost of producing an additional bushel of corn?

A: Opportunity cost is the cost you pay for passing up an opportunity. So, for example, if you had two friends who decided to go to different places at the same time, and they both invited you along, the cost of going with one would be that you couldn't go with the other. You can't be in two places at once! See? In your example, a particular piece of dirt can only have corn growing out of it or wheat growing out of it. The two plants cannot occupy the exact same space. Since an acre can grow twice as much wheat as corn, you can say that every bushel of corn 'costs' you two bushels of wheat. Or every two bushels of wheat costs you a bushel of corn. It works boths ways. Hope that helps!

Q: An example of opportunity cost and tradeoffs?
Okay so I am looking for some explanation of what the difference is of opportunity costs, and tradeoffs. I will give an example of two economic possible choices, and maybe somebody could explain the opportunity costs of this situation, and the tradeoffs. A person wants a pair of shoes, But he also wants a hat. They both cost 5 dollars, and he only has 5 dollars on him. What are the trade offs and opportunity costs of this situation.

A: The opportunity cost of the shoes is the hat. The opportunity cost of the hat is the shoes. The person faces a trade-off between the hat or the shoes.

Q: What could be the opportunity cost of opening a Papa Gino's?
What could be the opportunity cost of opening a Papa Gino's?

A: This is a classic question regarding an opportunity cost. We answered similar questions recently (see the links below). An "opportunity cost" is an economic term that means "the cost of something in terms of an opportunity forgone (and the benefits which could be received from that opportunity)", or "the most valuable forgone alternative (or highest-valued option forgone)", or the second-best alternative. The theory was exemplified first by Frederic Bastiat, in his famous parable about a shopkeeper in the 1850's, whose window is broken by a little boy. Briefly, at first, everyone sympathized with the shopkeeper, whose window was broken and who had to spend money to repair the wondow. But soon, townsfolk began to realize that the broken window made work for the glazier, who then bought bread, benefiting the baker, who then bought shoes, benefiting the cobbler, etc. Finally, the onlookers concluded that the little boy was not guilty of vandalism; instead he was a HERO -- a public benefactor, creating economic benefits for everyone! But, of course, this is a false conclusion, because it ignores the "opportunity cost". Because the shopkeeper had to purchase a new window, the shopkeeper could not buy a dress for his wife, so the seamstress suffered and could not buy bread for her table, so the baker suffered, etc. At the most basic level, therefore, the opportunity cost is the the "hidden cost" of the "lost opportunity", and it is intimately related to the "law of unintended consequences". In this case, the opportunity cost of opening a Papa Gino's includes the "lost opportunity" of using the start-up funds and start-up work for other investments or business purposes. Note: there are three surprisingly good articles at Wikipedia concerning "Opportunity Cost", "Frederic Bastiat", and even the "Parable of the Broken Window". See the cites, below. Great question. Hope this helps.

Q: Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it.?
Suppose a firm sells its product at a price lower than the opportunity cost of the inputs used to produce it. Which is true? A. The firm will earn accounting and economic profits. B. The firm will face accounting and economic losses. C. The firm will face an accounting loss, but earn economic profits. D. The firm may earn accounting profits, but will face economic losses.

A: D.

Q: What is the opportunity cost of leisure?
What is the opportunity cost of leisure? please help!

A: Money would be the most obvious one. Also, it is the time that you could have spent on doing other things, e.g. the work you could have gotten done, etc.

Q: The opportunity cost of going to college is?
The opportunity cost of going to college is a. the total spent on food, clothing, books, transportation, tuition, lodging, and other expenses. b. the value of the best opportunity a student gives up to attend college. c. zero for students who are fortunate enough to have all of their college expenses paid by someone else. d. zero, since a college education will allow a student to earn a larger income after graduation.

A: B

Q: What is the opportunity cost for Paula to produce one computer?
What is the opportunity cost for Paula to produce one computer? A. ¼ shirt B. ½ shirt C. 1 shirt D. 2 shirts E. 4 shirts

A: Maria, seems there are missing some vital data to answer correctly. Please provide it.

Q: I need help with figuring the opportunity cost of producing one product over another?
I need to learn how to find the pooprtunity cost of producing the first ton of wheat. The second ton of wheat. the third ton of wheat. The opportunity cost of producint the first three tons of wheat. The opportinity cost of producing the last three tons of wheat. The opportunity cost of producing the first 10 tons of corn. The opportunity cost of producing 50 tons of corn. I dont want you to do my assignment I need help figuring out how to find these. Ill also include the graph I was given. Wheat (tons) Corn (tons) 0 50 1 48 2 42 3 32 4 24 5 10 6 0 I would even like a web site with info on how to figure this out. Thank you

A: I can't quite read that table, but this is how you would figure out opportunity cost. Say you can produce 5 pounds of wheat, and 10 pounds of corn. You want to know the opportunity cost of producing one pound of wheat. So you would divide the 5 pounds of wheat by 5 (in order to get one pound of wheat). Then you would divide the 10 pounds of corn by 5. So, now you have 1 pound of wheat and 2 pounds of corn, which means that the opportunity cost of 1 pound of corn is 2 pounds of wheat. Not sure if that will help you, but that is how you figure out opportunity cost.

Q: how do you figure out opportunity cost?
Suppose that a farmer has land that can produce 20 bushels of corn per acre or 10 bushels of wheat per acre. She currently is producing 100 bushels of corn and 100 bushels of wheat. What is the opportunity cost to the farmer, measured in bushels of corn, of producing an additional 10 bushels of wheat? Jamie's farm is better suited for growing corn than wheat. He can grow 900 bushels of corn or 300 bushels of wheat or any combination in between. What is Jamie's opportunity cost of producing an additional bushel of wheat?

A: Your opportunity cost of taking some course of action is the value of the best alternative option foregone to take that action.

Q: If you receive a free ticket to concert, what, if anything, is your opportunity cost of attending the concert?
How does your opportunity cost change if miserable weather on the night of the concert requires you to leave much earlier for the concert hall and greatly extends the time it takes to get home afterward?

A: The opportunity cost of anything is what you gave up to take advantage of the opportunity. That would not change because of crappy weather and a long drive. It would change if additional invitations and opportunities came along that you had to forego to attend the concert.

Q: What is the meaning of OPPORTUNITY COST?
What is the meaning of Opportunity Cost?

A: Opportunity cost is the cost of giving up one good in order to obtain another. A simple example could be: say you want to attend college which costs $5000/year. You opportunity costs would be whatever else you could spend with $5000, the time put in and the salary you would forgo if you spent the next 4 years working.

Q: What is the opportunity cost of holding money as M1 money instead of doing something else with it?
What is the opportunity cost of holding money as M1 money instead of doing something else with it?

A: M1 is cash and cash equivalents. This means that the money is highly liquid (meaning, it can be used easily). Liquidity, in general means lower interest rates. Most longer term investments with higher yields (or, how much you get back) lack that sort of liquidity. IN A FEW WORDS: You are giving up higher yields for liquidity, when you hold money as M1.

Q: How does opportunity cost vary?
I'm doing my homework and I can't find the answer to this question and Why does opportunity cost vary? can you help me please?

A: By saying yes to one option, you say no to another. This cost of not doing the option you did not choose is the opportunity cost. For example, by choosing to go to college instead of working, you are giving up the income you could have earned. If you are Bill Gates, the opportunity cost of graduating from Harvard is very high. If you're not, then the income that you pass up may be substantially less. Opportunity cost will be different for every individual.

Q: Econ Question, opportunity cost and comparative advantage ?
Suppose that France and Switzerland both produce cheese and wine. France's opportunity cost of producing a bottle of wine is 1.5 pounds of cheese, while Switzerland's opportunity cost of producing a bottle of wine is 3 pounds of cheese. Suppose that France and Switzerland are considering trading wine and cheese with each other. What price of wine, in terms of cheese, would benefit both countries and make both countries willing to trade?

A: If they agreed upon a price of wine that was between 1.5 pounds and 3 pounds of cheese, there would be trade. France would produce wine and get "a good deal" in getting more cheese per bottle traded with the Swiss than they originally value their wine, while Switzerland would produce cheese and trade their cheese for France's wine at a "better deal" value than were they to make their own wine. Hope that helps.

Q: help with opportunity cost problem for my econ class?
Jamie's farm is better suited for growing corn than wheat. He can grow 900 bushels of corn or 300 bushels of wheat or any What is Jamie's opportunity cost of producing an additional bushel of wheat? Please help me figure this out how did you figure that out please?

A: 3 bushels of corn.