Question

A farmer produces both beans and corn on her farm. If it takes 2 acres of land to grow 200 bushels of corn and 4 acres of land to grow 200 bushels of beans, then her opportunity cost of 1 bushel of beans is:

Answer 1

1 bushel of corn

Explanation: Opportunity cost may be explained as the potential loss incurred by opting to go for an alternative option.

If it takes 2 acres of land to grow 200 bushels of corn

4 acres of land to grow 200 bushels of beans, then opportunity cost of one bushel of beans is:

Opportunity cost = (Return on best option not chosen - return on the option chosen)

Opportunity cost of one bushel of beans :

200 bushel of corn = 2 acres

I bushel of corn = (2/200) = 0.01 acres

200 bushel of beans = 4 acres

1 bushel of beans = (4/200) = 0.02 acres

0.02 acres used to grow 1 bushel of beans would have been used to produce 2 bushel of corn

Therefore opportunity cost = (2 - 1) = 1