Question

What is the opportunity cost (in civilian output) of a defense buldup that raises military spending from 6 to 6.8 percent of a $9 trilicon economy? Instructions: Enter your response as a whole number. biliton

Answer 1

The opportunity cost of raising military spending from 6 to 6.8 percent of a $9 trillion economy is $72 billion in civilian goods and services.

Step-by-step explanation:

The student's question pertains to the concept of opportunity cost within an economy: What is the opportunity cost (in civilian output) of a defense buildup that raises military spending from 6 to 6.8 percent of a $9 trillion economy?

To answer this, we first calculate the increase in military spending in terms of the total economy: 0.8 percent of $9 trillion. This gives us $72 billion (0.008 x 9,000 billion).

The opportunity cost is what the economy must give up in terms of civilian goods and services to allocate an additional $72 billion to defense. If we consider the entire economy as a mix of civilian and military output, this $72 billion could have been used to produce civilian goods and services if it were not redirected to defense spending. Therefore, $72 billion is the opportunity cost of the increased military spending in terms of civilian output.