This graph shows three different budget constraints: A,B,andC.

If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?
A)Twelve cases of soda
B)Eight cases of soda
C)Four cases of soda
D)It is impossible to say without knowing Bert's income.

Question

This graph shows three different budget constraints: A,B,andC.

If Bert has budget constraint A in the graph shown,what is his opportunity cost of three gallons of milk?
A)Twelve cases of soda 
B)Eight cases of soda 
C)Four cases of soda 
D)It is impossible to say without knowing Bert's income.

Quizplus · Accepted Answer

The opportunity cost of three gallons of milk is the amount of soda that Bert would have to give up to have the milk. With budget constraint A, Bert can either buy 6 cases of soda or 3 gallons of milk. Therefore, the opportunity cost of 3 gallons of milk is 6-3=3 cases of soda. This means that Bert would have to give up 4 cases of soda to have 3 gallons of milk, which is the best choice available.

This Graph Shows Three Different Budget Constraints: A,B,andC