Country A produces only cookies and hot dogs according to the formula y=14-2x, where y is...

Country A produces only cookies and hot dogs according to the formula y=14-2x, where y is the number of cookies and x is the number of hot dogs. Suppose that Country A currently produces 6 cookies. What is the opportunity cost of producing 2 extra cookies in terms of hotdogs?

Solutions

Expert Solution

The slope of the equation tells us the opportunity cost of producing 1 cookie in terms of hot dogs.
Slope = -2
So, 2 hot dogs need to be given up to produce 1 cookie.
Since slope is constant. 2 x 2 = 4 hot dogs need to be given up to produce 2 cookies.
Hence, the opportunity cost of 2 extra cookies is 4 hot dogs

Rahul Sunny answered 1 year ago

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