Question

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Israel's "Iron Dome" Works!
Israel’s Iron Dome is an air defense system designed to intercept and destroy incoming missiles and mortars fired across the border by Hamas and other Palestinian factions. It works. Israel’s Defense Minister claims the Iron Dome has been 90 percent effective in shielding population centers in the latest barrage of artillery fired into Israel by Hamas.
Source: News reports of July 20-28, 2014.
Suppose the annual cost of the Iron Dome is $500 million. What is the opportunity cost of this defense spending in terms of private housing, assuming a new home can be constructed for
a. $110,000?				houses per year
b. $140,000?				houses per year

Answer 1