Anna's Opportunity Cost Calculation

What is Anna's opportunity cost of producing ice cream scoops in terms of popsicles?

If Anna can make 6 popsicles per hour or 5 ice cream scoops per hour, what is her opportunity cost of producing ice cream scoops in units of popsicles given up per ice cream scoop?

Answer:

The opportunity cost of creating ice cream scoops in terms of popsicles for Anna is 1.2 popsicles per ice cream scoop.

Opportunity cost is a fundamental concept in economics that refers to the value of the next best alternative forgone when a choice is made. In this case, we are calculating Anna's opportunity cost of producing ice cream scoops in terms of popsicles.

To evaluate the opportunity cost of creating ice cream scoops in terms of popsicles, we must compare the productivity of generating popsicles to the productivity of producing ice cream scoops. If Anna can make 6 popsicles per hour or 5 ice cream scoops per hour, her opportunity cost of making ice cream scoops is the number of popsicles she would have to give up to make 1 ice cream scoop.

We may use the following formula to determine this:

Opportunity cost of creating ice cream scoops = (Popsicles Anna would have created / Ice cream scoops Anna actually produced)

The opportunity cost of creating ice cream scoops is (6 popsicles / 5 ice cream scoops).

Therefore, the opportunity cost of creating ice cream scoops is 1.2 popsicles per ice cream scoop.

By calculating Anna's opportunity cost, we can understand the trade-off she faces between producing popsicles and producing ice cream scoops. This information can help in making more informed decisions regarding resource allocation and production choices.