Answer to Question #234819 in Macroeconomics for Tchabu

Question

Suppose the Syejumba economy is currently producing 2 Vigayo and 300,000 gallons of maize. What is the opportunity cost of producing additional 200,000 gallons of maize? 

Answer 1

If additional 20,000 gallons of Maize is produced, then Maize production increases to 50,000 gallons. To be able to produce additional 20,000 gallons of Maize, 1,000 Vigayo must be sacrificed. 

Thus opportunity cost is 1,000 Vigayo.