Answer to Question #15746 in Economics of Enterprise for ankita

Question

If a new home can be constructed for $150,000, what is the opportunity cost of federal defense spending, measured in terms of private housing? (Assume a defense budget of $600 billion.)

Answer 1

Opportunity cost of federal defense spending is a number of houses which can be built using $600 billion. It's calculated, obviously, as follows
600000000000/150000=4000000




So opportunity cost is 4 millions houses.