ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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M & Ms
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popcorn
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Either A or B
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None of the above
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Detailed explanation-1: -A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else.
Detailed explanation-2: -The best measure of the opportunity cost of any choice is: the next best alternative you have given up to make that choice, even if no monetary costs are involved.
Detailed explanation-3: -Opportunity cost (also known as “alternative cost, ”) is the difference between a project’s cost estimate and another option that must be foregone in order to implement the project. Every choice we make also means giving up another option.
Detailed explanation-4: -For example, choosing public transportation to travel to a particular destination by foregoing the option of traveling in one’s own car is a good example of opportunity cost, because you end up saving money which needs to be spent on fuel.