Question

Nick won a $1,000 lottery prize. He can't decide what he should spend the money on. For some time now, he has been planning to buy a gaming console, a bicycle, and a watch. But he also needs to save money for an overseas trip in the future.

He can give up the bicycle and the watch, but he really wants that gaming console. On the other hand, he also wants to experience a foreign culture. In the end, he decides to save the whole amount for the trip.

Which item is the opportunity cost of Nick’s trip?

A)bicycle
B)gaming console
C)overseas trip
D)$1,000

Answer 1

b is the correct answer

Answer 2

The correct answer is B.

The opportunity cost is beared any time that a choice is made, and it is defined as the value of the best alternative that has been rejected when the choice is made. The alternative that meant the highest opportunity cost for an individual, would be the chosen one, in this case: saving money for the trip overseas.

Nick desired to purchase a gaming console too but, as he could not afford both options with the money of the lottery price, he has renounced to the console that constitutes the opportunity cost.