ECONOMICS
OPPORTUNITY COST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
playing basketball
|
|
|
studying for a test
|
|
|
dinner with friends
|
|
|
None of the above
|
Detailed explanation-1: -Your opportunity cost is the value of the best alternative you gave up, which might be attending a basketball game. Studying on Saturday night might rank well down the list of alternatives for you-perhaps ahead of cleaning your room but behind watching TV.
Detailed explanation-2: -The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment). A commuter takes the train to work instead of driving.
Detailed explanation-3: -Opportunity Cost Example Deciding whether to spend a gift card on a strawberry smoothie or a banana smoothie. Deciding whether to spend $7 every morning on coffee or consistently invest that money in a retirement account. Deciding whether to invest capital in refurbishing equipment or in better employee training.
Detailed explanation-4: -Principle #2: The cost of something is what you give up to get it. example: College education. The benefits are the job opportunities and personal satisfaction, but there are costs besides “out of pocket” costs like tuition and books.