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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

Economics

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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 a 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?