ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The correct answer to the given question is option c. the total cash expenditure needed to go to the movie plus the value of your time. The opportunity cost of going a movie is the net benefit associated with the next best alternative forsaken by choosing to go for the movie.

Detailed explanation-2: -Buying 1, 000 shares of company A at $10 a share, for instance, represents a sunk cost of $10, 000. This is the amount of money paid out to invest, and getting that money back requires liquidating stock. The opportunity cost instead asks where that $10, 000 could have been put to better use.

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: -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.