Calculate Opportunity Cost

Question

Jack consumes only shoes and socks. If Jack spends his entire budget on shoes, he can buy 9 pairs of shoes. If Jack spends his entire budget on socks, he can buy 72 pairs of socks. What is the opportunity cost of 6 pairs of shoes?

Answer 1

The opportunity cost is the amount you would have been able to buy if you did not buy the 6 pair of shoes. That is 6/9 or 2/3 of his budget that he spends on shoes. Therefore his opportunity cost is the number of socks he cannot buy. He cannot buy 2/3 of his total of 72 socks. Just multiply to get that. As a double check, note that he can buy 1/3 of the total amount of socks, so what he can buy in socks is what is left after you subtract the opportunity cost in socks from the total 72.