Question

what is opportunity cost ? explain with the help of a numerical example .​

Answer 1

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Suppose an economy produces only two goods X and Y. Further, suppose that by employing these resources fully and efficiently, the economy produces 1X + 10Y. If the economy decides to produce 2X, it has to cut down the production of Y by 2 units. Then 2Y is the Opportunity Cost of producing 1X.