Question

Suppose that you have received $300 as a birthday gift. you can spend it today or you can put the money in a bank account for a year and earn 5 percent interest. the opportunity cost of spending the money today, in terms of what you could have after one year, is

Answer 1

Answer: $15

Explanation: The opportunity cost is the opportunity lost in this case $300 at 5% annual interest = $315 after one year. So 315-300 =15 is the opportunity lost.