Answer to Question #239431 in Microeconomics for sophia

Question

Suppose you own an outdoor recreation company and you want to purchase​ all-terrain vehicles​ (ATVs) for your summer business and snowmobiles for your winter business. Your budget for new vehicles this year is ​$250,000. ATVs cost ​$5,000 each and snowmobiles cost ​$12,500 each.

a. Draw the budget line for your purchase of new vehicles.

Use the line drawing tool to draw a budget line. Properly label this line. Place end points one on horizontal and one on vertical axes.

Carefully follow the instructions​ above, and only draw the required objects.

b. What is the opportunity cost of one​ ATV?

The opportunity cost of one ATV is ...? ​snowmobile(s).

​(Round your answer to two decimal​ places.) i need help with question (B)

Answer 1

a. Budget line is represented on the graph:

b. Opportunity cost of one ATV is $\frac{5 000}{12 500} = \frac{2}{5} =0.40$