Economics 0455 · IGCSE · Opportunity cost

Opportunity cost — practice question

A shale oil deposit is found in a farming area. For the next ten years, the following estimates are given. If the land were used only for farming, it would generate income after tax of $\$10$ billion. If the land were used only for shale oil extraction, it would generate income after tax of $\$40$ billion. The government would collect $\$5$ billion in taxes from farming and $\$10$ billion in taxes from shale oil extraction. What is the opportunity cost of using the land only for farming?

  • A$\$25$ billion
  • B$\$30$ billion
  • C$\$35$ billion
  • D$\$45$ billion

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