A community for students.
Here's the question you clicked on:
 0 viewing
Neyaro
 2 years ago
what is the formula for opportunity cost
Neyaro
 2 years ago
what is the formula for opportunity cost

This Question is Open

mokchhya
 2 years ago
Best ResponseYou've already chosen the best response.0Opportunity cost of an item is a relative term defined as what you give up to obtain that item. Say if you are a farmer and by working 1 hr you can produce 1 oz potato . But if you intend to spend that same 1 hr to produce banana , you can produce 3 oz banana. From these you can calculate opportunity cost of potato in terms of banana and viceversa. Opportunity cost of 1 oz potato is 3 oz banana. Because you need to give up 3 oz banana to produce 1 oz potato. Similarly opportunity cost of 1 oz banana is 1/3 oz potato. Hope this helps.

Year11economics
 2 years ago
Best ResponseYou've already chosen the best response.0In Australia (and in year 11) we learn the formula to be something like: \[A_{i}=\frac{ B }{ A_{ii} }\] Where Ai is the amount of the forgone product (B) it will cost to produce A, B is the amount of forgone product you can produce and Aii is the amount of the product you can produce. Since that was a terrible explanation, an example of this is: If the Australian economy can produce 10 shoes or 50 moose, what is the opportunity cost of producing 1 moose? \[A_{i}=\frac{ B }{ A_{ii} }\] The opportunity cost of producing 1 moose = \[\frac{ 10 }{ 50 }\] The opportunity cost of producing 1 moose = 0.2 shoe(s). (Note, all the formula is saying is how many shoes per moose (shoes/moose) you can produce!)
Ask your own question
Sign UpFind more explanations on OpenStudy
Your question is ready. Sign up for free to start getting answers.
spraguer
(Moderator)
5
→ View Detailed Profile
is replying to Can someone tell me what button the professor is hitting...
23
 Teamwork 19 Teammate
 Problem Solving 19 Hero
 Engagement 19 Mad Hatter
 You have blocked this person.
 ✔ You're a fan Checking fan status...
Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.