Question

"In deciding how to spend an hour of his time, John has identified four activities he can choose from. The opportunity cost of choosing activity A is defined as the benefit he would have received from all of the other activities"True/False

Answer 1

Answer:

The statement is: False.

Explanation:

Opportunity cost is the return of the option chosen compared to the option that was left behind. It is also described as the return of the option taken over the option forgone or the return that the next available option could provide us over the option that is going to be chosen.

Thus, the opportunity cost for John to choose option A is the value of only the next best alternative available among his other three options.

Answer 2

Answer:

False

Explanation:

Since John could not possibly partake in all of the remaining three activities, the opportunity cost cannot be the benefit received from all of the other activities. Instead, the opportunity cost is the benefit he would have received from the next best alternative alone.