Question

s planning a cruise to Mexico and has a budget for new clothes of $300. The average price for a pair of shoes is $50 while the average price for a suit is $100. Danielle already has 4 pairs of shoes purchased for her cruise, what is the opportunity cost of buying two more pairs of sh

Answer 1

The opportunity cost of buying two more pairs of shoe is 1 suit.

What is opportunity cost?

Opportunity cost is an economic term for expressing cost, in terms of foregone alternative.

Given the information above,

Her opportunity cost of consuming one extra pair of shoes instead of one suit

= $50 / $100

= 0.5 suit or half a suit

Her opportunity cost of consuming one suit instead of a pair of shoes

= $100 / $50

= 2 pairs of shoes

Hence, the opportunity cost of consuming 2 more pairs of shoes

= 0.5 suit x 2

= 1 suit

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