ECONOMICS (CBSE/UGC NET)

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ECONOMICS

OPPORTUNITY COST

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
The city was building a new park. There was only enough money in the budget to includenew tennis courts, a wading pool, a music stage, or a parking lot. At the public hearing, manyof the people wanted more parking. City Council voted to build the music stage afternarrowing it down to either the stage or the wading pool. What was the city’s opportunity cost?
A
tennis court
B
wading pool
C
music stage
D
parking lot
Explanation: 

Detailed explanation-1: -When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.

Detailed explanation-2: -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.

Detailed explanation-3: -The two types of opportunity costs are explicit opportunity cost and implicit opportunity cost.

Detailed explanation-4: -In economics, opportunity cost represents the potential gain that is lost when choosing one investment choice over another. In short, it’s a value of the road not taken.

There is 1 question to complete.
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