Question

If a new home can be constructed for $150,000, what is the opportunity cost of federal defense spending, measured in terms of private housing? (Assume a defense budget of $700 billion.)

Answer 1

Opportunity cost of federal defense spending is a number of houses which can be built using $600 billion. It's calculated as follows:

600000000000/150000=4000000
So opportunity cost is 4 millions houses.

Answer 2

$ 4666666.67

Step-by-step explanation:

given,

assume defense budget = $700 billion

A new home can be for constructed = $150,000

opportunity cost is one in which the benefits is sacrifice of the next best alternative, here the next best alternative is expenditure on defense budget.

hence the cost is

=
`(700,000,000,000)/(150,000)`

= $ 4666666.67