Question

Suppose that you prefer reading a book you already own to watching TV and that you prefer watching TV to listening to music. If these are your only three choices, what is the opportunity cost of reading?
a. watching TV and listening to music
b. watching TV
c. listening to music
d. sleeping
e. the price of the book

Answer 1

Answer:

B. Watching TV

Explanation:

Opportunity Cost is the cost of next best alternative forgone while choosing an alternative.

Eg: If I can consume apples & oranges, I like apples more than oranges. The opportunity cost of apples consumption is the next best option i.e oranges forgone.

As per given preferences : Book Reading > Watching TV > Listening Music

( '>' refers to preferred over)

The opportunity cost of Book reading is the next best option sacrifised i.e Watching TV.