Maryland farmers turn from tobacco to flowers Maryland tobacco farmers will be s
ID: 1111398 • Letter: M
Question
Maryland farmers turn from tobacco to flowers
Maryland tobacco farmers will be subsidized if they switch from growing tobacco to growing crops such as flowers and organic vegetables.
Source: The New York Times, February 25, 2001
How does offering farmers a payment to exit tobacco growing influence the opportunity cost of growing tobacco?
What is the opportunity cost of using the equipment owned by a tobacco farmer?
Offering farmers a payment to exit tobacco growing _______ the opportunity cost of growing tobacco.
The opportunity cost of using the equipment owned by a tobacco farmer is _______.
A. increases; the implicit cost of using the tobacco equipment
B. increases; the next best alternative forgone, which could be the production of flowers and organic vegetables
C. does not change; the next best alternative forgone, which could be the production of flowers and organic vegetables
D. decreases; the sum of the implicit and explicit costs of using the tobacco equipment
E. decreases; the explicit cost of using the tobacco equipment
Explanation / Answer
Offering farmers a payment to grow less of tobacco, DOES NOT CHANGE the opportunity cost of growing tobacco, rather it increases the opportunity cost of growing flowers and organic plants
the opportunity cost of using the equipment owned by a tobacco farmer is the NEXT BEST ALTERNSTIVR FOREGONE , WHICH COULD BE PRODUCTION OF FLOWERS AND ORGANIC VEGETABLES.
hence the correct answer is (C)