anonymous
  • anonymous
Good day my name is Dudley and I would like to know how do I calculate the opportunity cost
OCW Scholar - Principles of Microeconomics
  • Stacey Warren - Expert brainly.com
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SOLVED
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jamiebookeater
  • jamiebookeater
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anonymous
  • anonymous
When given that a party can produce two goods, take the quantity of the second and put it over the quantity of the first. You now have the opportunity cost of doing 1 unit of the first good, in terms of the second. Bob can do 8 math problems or 4 science problems in one sitting. Put the 4 over the 8 to get 1/2. Bob could have done 1/2 science for every 1 math he chooses to do. That is the opportunity cost. The reciprocal is then also true, He could have done 2 math for every 1 science that he does.
anonymous
  • anonymous
opportunity cost = explicit costs + implicit cost explicit cost= payments to non owners of a firms for their resources. example, wages paid to labor, the cost of electricity. implicit cost= opportunity costs of using resources owned by the firm. example, when you used your own building for the firm, you made no payment to anyone, then you gave up the opportunity to earn rental payments.
anonymous
  • anonymous
OC cost means that you have chosen to be on the Internet altough you could have been hanging out with your friends. When the PRODUCER wants to measure his OC of producing 2 goods (X1 and X2) he can calculate it like this: \[OC= \frac{ DeltaX2 }{ DeltaX1 } = -\frac{ p1 }{ p2 }\] THe producer can see clearly how much does it cost to produce an EXTRA UNIT of the good X2, in other words, how much units of the X1 good he has to give up so he could produce an extra unit of X2 good. Hope this helps.

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