Question

Suppose that a university decides to spend $1 million to upgrade personal computers and scientific equipment for faculty rather than spend $1 million to expand parking for students. This example illustrates:A. distorted priorities.B. opportunity costs.C. increasing opportunity costs.D. productive efficiency.

Answer 1

Answer:

Opportunity cost

Explanation:

Suppose that a university decides to spend $ 1 milion to upgrade personal computers and scientific equipment for faculty rather than spend $  million to expand parking for students . This example illustrates opportunity costs.

Opportunity cost refers to the cost shifting one opportunity to another opportunity or availing one opportunity in terms of another.  

Formula of Opportunity cost is :

Opportunity cost    =  Total Revenue - Economic Profit

                                    Or

Opportunity cost  = What one sacrifice / What one gain

In Opportunity cost we chose one thing or option over the cost of another thing or option. Opportunity cost places a important role in economic theory .

As it tell us that people can choose only one thing not the both things at the sane time.