Question

Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10 apple trees. However the 3 acres differ in their ability to support orange trees. He can grow 30 orange trees on the best land, 20 orange trees on the ok land, and 10 orange trees on the bad land. If he initially has all is land growing apples, what would be the opportunity cost of growing an orange tree

Answer 1

According to the question, the 3 acres of land can support 10 apple trees irrespective of the land quality.

But there is an issue in cultivating orange trees because it requires some land of good quality for better production results.

Opprtunity cost is sacrifying return from one project to attain the return from the another project.

This means opportunity cost of growing 30 orange tree on the best land is 30 apple tree, growing 20 orange trees on ok land is 30 apple tree and growing 10 orange trees on bad land is also 30 apple trees.

So from the opportunity cost scenario, it is better to cultivate orange only if the price and land quality is best otherwise, apple trees are the best option here.