1.

Explain the concept of Marginal opportunity cost by giving a a numerical example.

Answer» Marginal Opportunity Cost of any commodity is defined as the amount of sacrifice of another commodity so as to gain an additional unit of the given commodity.This can also be termed as Marginal Rate of Transformation which is the ratio of number of units of a good sacrificed to produce an additional unit of the other good.Example:Suppose for a manufacturing company, production of 1 consumer good requires the company to sacrifice production of 4 capital goods, then this 4 capital goods will be the marginal opportunity cost of producing an additional consumer good.


Discussion

No Comment Found

Related InterviewSolutions