# Opportunity Cost

Khan Academy2011-12-29

1M views|12 years ago

ðŸ’« Short Summary

The section discusses the opportunity cost and marginal cost of increasing rabbit production in scenario E, where catching one more rabbit would require giving up 40 berries. It also explores the opportunity cost of increasing berry production by sacrificing one rabbit, framing it as the cost of 20 more berries. The concept of marginal cost is further explained in the context of the video's focus on the trade-offs between catching rabbits and gathering berries.

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ðŸ“Š Transcript

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Moving from scenario E to scenario D by catching one more rabbit requires giving up 40 berries.

00:00The production possibilities frontier (PPF) limits the ability to increase rabbit production without decreasing berry production.

The opportunity cost of catching one more rabbit is giving up 40 berries.

This cost is also known as the marginal cost in the context of the video.

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The opportunity cost of 20 more berries in scenario E is giving up one rabbit.

02:22The opportunity cost is not a marginal cost in this case, as it involves the cost of 20 more units, not just one.

If expressed as a marginal cost, one more berry is equal to one twentieth of a rabbit.

The opportunity cost of one berry is one twentieth of a rabbit, or the marginal cost of an extra berry is also one twentieth of a rabbit.

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The video discusses the opportunity cost and marginal cost at different points in the curve.

05:11Viewers are encouraged to think about the opportunity cost in different scenarios based on the data from the constructed table in the last video.

They are also encouraged to consider the cost of an extra rabbit or extra berries in terms of the other resource.

ðŸ’« FAQs about This YouTube Video

### 1. What is the opportunity cost of catching one more rabbit in scenario E?

The opportunity cost of catching one more rabbit in scenario E is giving up 40 berries.

### 2. How is the opportunity cost related to the production possibilities frontier (PPF)?

The opportunity cost is related to the production possibilities frontier (PPF) as it represents the cost of forgoing the next best alternative when making a decision about resource allocation.

### 3. What does the marginal cost refer to in the context of the video?

In the context of the video, the marginal cost refers to the cost of producing an additional unit of a good, where the cost is measured in terms of the quantity of another good that must be given up.

### 4. How can the opportunity cost and marginal cost be calculated in scenario E?

In scenario E, the opportunity cost of catching one more rabbit is 40 berries, while the marginal cost can be calculated as the cost of one more rabbit in terms of the quantity of berries that must be given up.

### 5. What is the opportunity cost of 20 more berries in scenario E?

The opportunity cost of 20 more berries in scenario E is giving up one rabbit.

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