Opportunity cost - OPPORTUNITY COST Quick Review Scenario 1...

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OPPORTUNITY COST Quick Review
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Scenario 1 Minutes needed to make one bushel of corn Minutes needed to make one pound of pork Sardi 20 12 What is her opportunity cost of producing one bushel of corn?
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Easier way Opportunity cost of corn: How much pork do I give up to get one corn? It takes me 20 minutes to make corn. I will be taking those 20 minutes away from making pork. How much pork can I make in those same 20 minutes? It takes 12 minutes to make one pork. 20 divided by 12 gives me 5/3 – Note this only comes because of previous deduction. You can’t copy this every time.
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Harder way Graph it. P We will say we have a total of 60 minutes. Will always work. What you want the opportunity cost of MUST be on the horizontal axis. Rise over run. Gives you the slope which is the opportunity cost. If this were not a straight line you would need to find the rise over the run at that specific point (tangent line).
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Scenario 2 Alfalfa bushels per acre Barley bushels per acre Victor 4 2 What is the opportunity cost of producing one bushel of barley?
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