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alidinak alidinak
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2 weeks ago
Opportunity Costs

An economy produces two items: pumpkins and tulips.
PumpkinsTulips
15​0
12​6​
9​12​
6​18​
3​24​
030​
What is the opportunity cost of producing one pumpkin? What is the opportunity cost of producing one tulip? Round your final answer to two decimal places.
This economy faces ________ opportunity cost.

▸ 2 tulips, 0.5 pumpkins, increasing

▸ 0.5 tulips, 2 pumpkins, increasing

▸ 2 tulips, 0.5 pumpkins, constant

▸ 0.5 tulips, 2 pumpkins, constant
Textbook 

Macroeconomics


Edition: 3rd
Authors:
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rbacon2rbacon2
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2 tulips, 0.5 pumpkins, constant

The opportunity cost of producing one pumpkin is the number of tulips you have to give up.
In this example, 3 pumpkins can be produced at a cost of (30 - 24) tulips, or
3 pumpkins = 6 tulips
1 pumpkin = 6/3 tulips = 2 tulips

The opportunity cost of producing one tulip is the number of pumpkins you have to give up.
In this example, 6 tulips can be produced at a cost of (15 - 12) pumpkins, or
6 tulips = 3 pumpkins
1 tulip = 3/6 pumpkins = 0.5 pumpkins

Because the price is the same regardless of where the economy starts (15 pumpkins and 0 tulips or 6 pumpkins and 18 tulips), the opportunity cost is constant.
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