Question

Brenda is taking a vacation to California. She plans to spend $3,000 total on the flight, hotel, food, and incidentals. She will need to close her pet sitting business while she is gone, during which time she would have earned $1,000. What is Brenda's opportunity cost of taking the vacation? Enter a whole number with no dollar sign.

Which of the following best illustrates the idea of economic growth?

- being able to produce on the production possibilities frontier

- being able to consume on the production possibilities frontier

- an inward shift of the production possibilities frontier

- an outward shift of the production possibilities frontier

Answer 1

1. Brenda's opportunity cost is the cost of next best alternative foregone. If Brenda did not have to go for vacation, she would have earned $1000 which she now has to forego for the vacation. Brenda's opportunity cost of taking the vacation is $1000.

2. d.  an outward shift of the production possibilities frontier

An outward shift of the PPF indicates growth in resources or advancement in technology and directly relates to the idea of economic growth.