A farmer has land that can produce 20 bushels of corn per acre or 10 bushels of wheat per acre....

Question:

A farmer has land that can produce 20 bushels of corn per acre or 10 bushels of wheat per acre. She currently is producing 100 bushels of corn and 100 bushels of wheat. What is the opportunity cost to the farmer, measured in bushels of corn, of producing an additional 10 bushels of wheat?

Opportunity Cost

Opportunity cost is the cost of an opportunity forfeited because a particular cause of action was selected. While opportunity cost will not appear on the income statement, it is always a relevant cost in decision-making.

Answer and Explanation:


If the farmer chooses to produce an additional 10 bushels of wheat, she will produce 20 bushels of corn less. Thus, the opportunity cost of producing the 10 wheat bushels is 20 corn bushels.



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How to Calculate Opportunity Cost

from Economics 102: Macroeconomics

Chapter 1 / Lesson 3
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