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Answer:
In the context of Consumer Theory or Indifference Curve involving two goods,the opportunity of any one good is computed by how much of the other good is foregone or sacrificed to purchase one more unit of that particular good.
Explanation:
- In this instance,when Bill's diner consumes 35 burgers and 25 hotdogs,its opportunity cost of additional hot dog=[tex]\frac{35}{25} =\frac{7}{5}=1.4[/tex].Therefore,initially Bill diner's opportunity cost of an additional hot dog is 1.4 units of burger.
- Now,when Bill's diner chooses to consume a combination of 25 burgers and 65 hot dogs,its opportunity cost of additional hot dogs=[tex]\frac{25}{65} =\frac{5}{13} =0.385[/tex] approximately.Hence,Bill's diner is willing to sacrifice approximately 0.385 units of burger to consume an additional unit of hot dog.
- Now,due to the change in consumption combination,the change in opportunity cost of additional hot dog=[tex](1.4-0.385)=1.015[/tex] units of burger.Notice,that here the opportunity cost of additional hot dog decreased from 1.4 units of burger to 0.385 units of burger as Bill's diner changed the consumption combination of both burgers and hot dogs.
The opportunity cost of each additional hotdog is 2.6 burgers
Opportunity cost is the cost of he next best option that is forgone, when an economic agent chooses one option over another option. The opportunity cost of increasing the production of hotdogs is the quantity of burgers that are not produced.
Opportunity cost of each additional hotdog = total hotdogs made / total burgers made
65 / 25 = 2.6 burgers
To learn more about opportunity cost, please check : https://brainly.com/question/13036997?referrer=searchResults
