Question

A test is scheduled for Monday morning, but you went to a party on Saturday night. If you hadn't attended the party, you could have studied for the test or gone to a movie. Which of the following sentences is true?
a. The opportunity cost of going to the movie is studying for the test.
b. The opportunity cost of going to the party is the movie.
c. The opportunity cost of going to the party is both the movie and the study time.
d. Because you could go to the party only that night but could go to a movie any time, the opportunity cost of the party is the study time.
e. From the above information it's not possible to determine the opportunity cost of attending the party.

Answer 1

Answer:

C) The opportunity cost of going to the party is both the movie and the study time.

Explanation:

Opportunity costs are the costs (or lost benefits) from choosing one alternative activity or investment over another.

In this case, if you decide to go to the party on Saturday night, you will not be able to go to the movies and you will not be able to study for your exam.