Question

Assume Brandon can buy either 1 DVD for $20 or 3 CDs for $25. What is the opportunity cost if he decides to buy 3 CDs? Select the correct answer below: the 3 purchased CDs the lost opportunity to buy 1 DVD. the difference of $5 between the two options the amount of time Brandon must work to purchase 3 CDs

Answer 1

Answer:

The opportunity cost of buying 3 CDs is the lost opportunity to buy 1 DVD

Explanation:

Opportunity cost is the cost of alternative forgone.It is cost of the item not purchased due the current buying decision.

It is also applicable to a business division selling to another division within the company.The cost of such internal sale is viewed as the variable cost of the product plus the contribution forgone from not selling to external party.This is most likely the case when the selling division does not have a spare capacity with which it can fulfill internal sale request.