Question

With the same amount of resources, Firm A can purchase 60 hydraulically operated equipment or 120 mechanically operated equipment. What is Firm A's opportunity cost of purchasing 1 hydraulically operated equipment?

Answer 1

Opportunity Cost of purchasing 60 hydraulic operated equipment is 120 mechanically operated equipment

Therefore Opportunity Cost of pushing one hydraulic equipment calculated as below:

The opportunity cost of One Hydraulic to Mechanical = $\frac{60}{60}$ = 1 ;

To mechanical equipment =$\frac{120}{60}$ =2

The opportunity cost of purchasing 1 hydraulic operated equipment is 2 of purchasing mechanically operated equipment