Question

Which situation is the best example of opportunity cost?

Answer 1

A country that chooses to export bananas but not wheat.

Answer 2

ANSWER: Opportunity Cost is the cost of losing the next best alternative compared to the option that has been chosen. There can be numerous situations of opportunity cost. A situation which is simple yet best is as follows:

David is a doctor who charges $20 from his patients for regular checkup. He knows that weekend evening will be full of patients and he won't have time to rest. There are an average of 15 patients every weekends. So by the simple calculation, David will be earning $300 on a single weekend evening. But due to popular rock concert being organized in the city on a weekend evening, David decides to skip the day and visit the rock concert. The ticket price for the rock concert was $50. So,the opportunity cost for David was $350 because not only David lost the chances of his earning that evening but he also spent $50 on the tickets of the rock concert.