Chapter 32, Problem 5P

To determine

Measurement of Opportunity Cost

Concept introduction:

Opportunity Cost: Opportunity cost is an implicit cost. Opportunity cost is the amount of a product or service that needs to be given up (forgone) to avail more of the next best alternative. The price paid for the next best decision is called the opportunity cost.

Comparative advantage: It is a concept by which we can compare two countries and say which country can produce the commodity more efficiently. The country/ economy producing a commodity at a lower opportunity cost can produce it more efficiently.