Answer to Question #323382 in Macroeconomics for mpho

Question

the opportunity cost of producing a cellphone

Answer 1

Opportunity cost is the value of the next best alternative to any decision made. For instance, we have two goods; to increase the production of one good, you have to reduce the output of the other. The opportunity cost of producing a cellphone will be the decrease in the quantity of another good divided by the increase in the number of cellphones. The opportunity cost of a cellphone escalates as more cellphones are produced.