Farmer Brian has 3 acres of land which he farms efficiently. Each acre can suppo

Question

Farmer Brian has 3 acres of land which he farms efficiently. Each acre can support 10 apple trees. However the 3 acres differ in their ability to support orange trees. He can grow 30 orange trees on the best land, 20 orange trees on the ok land, and 10 orange trees on the bad land. If he initially is using 2 acres to grow apples, what would be the opportunity cost of growing another apple tree?

1 orange tree

2 orange trees

3 orange trees

1/2 of an orange tree

1/3 of an orange tree

50 orange trees

Economics assumes firms generally try to maximize profits. This means that profit-maximizing behavior

Explanation / Answer

The farmer has the alternative of growing 10 apple trees or 10 orange trees.

So the opportunity cost of growing another apple tree is one orange tree.

2. Profit maximizing behavior is neither good nor bad. It is what we should expect.

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