Suppose you own an outdoor recreation company and you want to purchase all-terrain vehicles (ATVs) for your

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Suppose you own an outdoor recreation company and you want to purchase all-terrain vehicles (ATVs) for your summer business and snowmobiles for your winter business. Your budget for new vehicles this year is $240 000. ATVs cost $8000 each and snowmobiles cost $12 000 each.

a. Draw the budget line for your purchase of new vehicles.

b. What is the opportunity cost of one ATV?

c. What is the opportunity cost of one snowmobile?

d. Does the opportunity cost of one ATV depend on how many you purchase? Why or why not?

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...
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Microeconomics

ISBN: 9780134835839

16th Canadian Edition

Authors: Christopher T.S. Ragan

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