Question

The United States Congress must approve the federal budget. This involves many difficult choices. For

example, the Congress can decide to spend money on national defense, health insurance programs, roads and
highways, education, and many other worthwhile causes. Curve B illustrates a hypothetical trade-off between
spending for defense and highways.
a. What is the opportunity cost of one aircraft carrier?_
b. What is the opportunity cost of 300 miles of highway?
C.
What other information would you need to decide on the best combination of defense spending and
highway construction?

Answer 1

a. What is the opportunity cost of one aircraft carrier?_

11 airliners.

Step-by-step explanation: By converting the amounts of the two goods, 55,000 airplanes equal 5,000 aircraft carriers, one may calculate the potential cost of an aircraft carrier. Thus, 1 carrier equals 55,000/5,00 = 11 aircraft. Therefore, 11 jumbo jets are the opportunity cost of a carrier.

b. What is the opportunity cost of 300 miles of highway?

The most preferable alternative that was rejected as a result of a choice.

c. What other information would you need to decide on the best combination of defense spending and highway construction?

generates jobs directly and can improve economic output indirectly through the spillover of technology and human capital to the civilian economy.