Question

Horatio can produce either a combination of 15 bird houses and 25 wind chimes or a combination of 30 bird houses and 15 wind chimes. If he now produces 30 bird houses and 15 wind chimes, what is the opportunity cost of producing an additional 10 wind chimes?

Answer 1

Answer:

So 10 wind crimes has an opportunity cost 15 bird houses

or 1.5 per unit.

Explanation:

The opportunity cost is the cost of the goods it could been produced instead of the current output.

For the 10 wind chimes it will be the decreases in the birdhours production.

When Horatio moves to 25 from 15 wind chimes his bird house production fall to 15 from 30 Therefore, it decreases by 15

So 10 wind crimes has an opportunity cost 15 bird houses

we can do this metric by unit:

15/10 = 1.5 each additional wind chimes cost 1.5 bird house.