Answer:
a. Sam's opportunity cost of making one mini-sandwich is [tex]\frac{150}{300}=0.5[/tex] i.e 0.5 serving of melon slices.
b. Sam's opportunity cost of making one melon appetizer is [tex]\frac{300}{150}=2[/tex] i.e 2 serving of mini-sandwiches.
c. Suppose the reception has been postponed, so Sam has an extra four hours to prepare. The opportunity cost of making one mini-sandwich now becomes [tex]\frac{150}{300}=0.5[/tex] i.e 0.5 serving of melon slices.
d. Suppose the reception has been postponed, so Sam has an extra four hours to prepare. The opportunity cost of making one melon appetizer now becomes [tex]\frac{300}{150}=2[/tex] i.e 2 serving of mini-sandwiches.
e. Suppose Sam's friend Chris helps by preparing the melon slices, increasing Sam's productivity to 300 mini-sandwiches or 300 melon appetizers per hour. The opportunity cost of making one mini-sandwich now becomes is [tex]\frac{300}{300}=1[/tex] i.e 1 serving of melon slices.
f. Suppose Sam's friend Chris helps by pre-paring the melon slices, increasing Sam's productivity to 300 mini-sandwiches or 300 melon appetizers per hour. The opportunity cost of making one melon appetizer now becomes is [tex]\frac{300}{300}=1[/tex] i.e 1 serving of mini-sandwiches.
Explanation:
Opportunity costs in economics, also known as the alternative forgone is defined as the value or benefits of what an individual or business entity has to give up in order to choose something else that's desired. This simply means that, when an individual or business entity chooses one alternative over another, they miss out on other benefits or valuable profits.
Examples of opportunity costs are;
1. Taylor giving up going to the cinema to see a comedy movie, to study for his final exams in order to pass with distinctions. The opportunity cost here, is the cost of the comedy movie and the satisfaction associated with seeing it.
2. Messi attends football training in order to become the world's best player instead of taking a vacation to Las Vegas. The opportunity cost here, is the vacation.
3. If Cynthia chooses not to go to work. The opportunity cost here, is lost wages and allowance.
