Question

If an economy can produce a maximum of 100 units of good X and the opportunity cost of 1X is always 5Y, then what is the maximum number of units of good Y the economy can produce

Answer 1

Answer:

500 Y

Explanation:

Opportunity cost can simply be defined as the cost of an alternative forgotten in order to acquire a particular good. For an example , if i have to forgo buying a sugar in order to buy bread , the opportunity cost of the bread is the cost of sugar that i did not buy.

In the scenario given , the  opportunity cost of 1x is 5y. This means that for each x , 5 y have to be forgone. Now, if the maximum units that can be produced is 100 x, the equivalent maximum number of Y = 100 * 5 = 500.