Question

The opportunity cost of increasing production of Cellphones from nil to $5,000$ units is?

Situations	Cellphones(units)	Rice(quintals)
A	$0$	$60,000$
B	$1000$	$55,000$
C	$2000$	$48,000$
D	$3000$	$38,000$
E	$4000$	$23,000$
F	$5000$	$0$

• A. $23,000$ quintals of rice
• B. $60,000$ quintals of rice
• C. $1,000$ quintals of rice
• D. Nil

Answer 1

Answer: (B)

$60,000$ quintals of rice

Opportunity cost of production of a commodity refers to the sacrifice made in terms of the next best alternative which could be produced out of that resources in order to produce every unit of the given commodity. Therefore to produce 5000 cellphones, production of rice is decreased from 60,000 quintals to nil. So opportunity cost to produce 5,000 units of cellphone is 60,000 quintals of rice.