Question

If a new home can be constructed for 120,000 what is the opportunity cost of federal defense spending assume a defense budget of 700 billion

Answer 1

Answer:

58,333.33

Explanation:

Opportunity cost is the value of the next best alternative. It is the forgone benefits as a result of choosing one option over the others.  Opportunity cost occurs due to the scarcity of resources that forces people to make choices. The value of the sacrificed option is the opportunity cost.

If the cost of constructing a new home is 120,000, the opportunity cost of one house equals the next best alternative of spending the 120,000. With a budget of 7 billion, the opportunity cost of spending 7 billion will be  7 billion divided by 120,000.

=7,000,000,000/120,000

=58,333.33