Question

Looking to invest in his first pair of leather dress shoes, Sean is deciding between some Alden slip-ons and some Allen Edmonds wingtips. The Aldens are more expensive. What is included in the opportunity cost of buying the Aldens?
A. the savings that would come from buying the wingtips
B. the classic, snazzy look that comes with wearing wingtips
C. the no-lace convenience of slip-ons
D. the money that would be spent to buy the wingtips
E. the pride that comes with wearing a pair of Alden shoes

Answer 1

Answer: Option (A) and (B) are correct.

Explanation:

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

In our case, the opportunity cost of purchasing Aldens is the savings that is foregone and classic, snazzy look that comes with wearing wingtips.