based on the graph above assume that good a cost $20 while good b cost $10. what is the opportunity cost for…
based on the graph above assume that good a cost $20 while good b cost $10. what is the opportunity cost for this consumer?
Answer
Explanation:
Step1: Recall opportunity - cost formula
Opportunity cost of one good in terms of another is the ratio of the price of the good given up to the price of the good gained.
Step2: Identify the prices
The price of good A ($P_A$) is $20 and the price of good B ($P_B$) is $10.
Step3: Calculate the opportunity cost
The opportunity cost of good A in terms of good B is $\frac{P_A}{P_B}=\frac{20}{10} = 2$.
Answer:
2