Suppose you own a courier service and you use two types of delivery vehicles - Model A,which costs $30 000 to purchase,and Model B,which costs $50 000 to purchase.You have a budget of $300 000 for the purchase of new vehicles.What is the opportunity cost of one Model A vehicle?
A)0
B)3/5 ths of a Model B vehicle
C)5/3rds of Model B vehicle
D)5 Model B vehicles
E)3 Model B vehicles

Question

Quizplus · Accepted Answer

To find the opportunity cost of one Model A vehicle, we need to determine how many Model B vehicles we could purchase instead with the same amount of money.

With a budget of $300 000, we can purchase: 
- 10 Model A vehicles ($30 000 x 10 = $300 000) 
- 6 Model B vehicles ($50 000 x 6 = $300 000)

Therefore, the opportunity cost of one Model A vehicle is the number of Model B vehicles we could have purchased instead, which is 6/10 or 3/5ths of a Model B vehicle.

As for the best choice, it depends on the needs and circumstances of the courier service. If they prioritize affordability and don't have the need for the features and capabilities of Model B vehicles, they might choose to purchase more Model As. However, if they prioritize performance and efficiency, they might choose to go for fewer but higher-quality Model Bs.

Suppose You Own a Courier Service and You Use Two