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# Answer to Question #113896 in Microeconomics for Amanpreet Kaur

Question #113896
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?
1
2020-05-07T10:29:06-0400

a. Budget line is represented on the graph:

Â

b. Opportunity cost of one ATV isÂ 8 000/12 000 = 2/3Â snowmobiles, as money we spend to buy 1 ATV can be alternatively used to buy 2/3 of snowmobile.

Â

c. Analogously, opportunity cost of one snowmobile isÂ 12 000/ 8 000=1.5Â ATW

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