Question

Cultivating paddy in an acre of land
can fetch 10,000 kg of paddy. But if
ginger is cultivated on the same one
acre, we get ginger 12,000 kg. Find
out the opportunity cost of (a) ginger
(b) paddy.​

Answer 1

Explanation:

Opportunity cost is actually the cost which has not been benefited when an option has been chosen leaving behind the best possible options. It gives an idea as to how much compromise a person is doing with respect to other available options

Opportunity cost can be calculated as;

= What is lost / What you gained

a) Now when selecting ginger against paddy;

Opportunity cost = 10000/ 12000 = 0.833

b) Now when selecting paddy against ginger;

Opportunity cost = 12000/ 10000 = 1.2

Hence opportunity cost in B is more