# ECONOMICS (CBSE/UGC NET)

## ECONOMICS

### OPPORTUNITY COST

 Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
A firm operating at ‘X’ produces 70 whips and 60 saddles. It changes production to ‘Y’ producing 20 whips and 90 saddles. The opportunity cost of this production change is
 A 20 whips B 30 saddles C 50 whips D 60 saddles
Explanation:

Detailed explanation-1: -Formula of Opportunity cost = Return of Investment from the best option available – Return of investment from the chosen option.

Detailed explanation-2: -Opportunity cost is the value of sacrificing the best alternative available to the choice made. The opportunity cost of an additional unit of goods is the marginal opportunity cost.

Detailed explanation-3: -The opportunity cost of moving from point C to D is 40 tons of oranges. The per-unit opportunity cost of moving from point C to point D is 1/2 ton of oranges (40 tons of oranges/80 tons of pears). Economic growth is shown by a shift to the right of the production possibilities curve.

Detailed explanation-4: -The amount spent by a firm on resources bought in the market is an opportunity cost of production because the firm could have bought different resources to produce some other good or service. If the firm owns capital and uses it to produce its output, then the firm incurs an opportunity cost.

There is 1 question to complete.