Question

You have chosen to take a trip during spring break. If you had not gone, you would either have worked at a temporary job or studied for exams. The opportunity cost of your trip is options: A) the wages you would have earned from working and the lower grade earned by not studying. B) the lower grade earned by not studying. C) the value of the trip. D) the wages you would have earned from working. E) We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.

Answer 1

Answer:

E) We cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.

Explanation:

Opportunity cost also known as the alternative forgone, can be defined as the value, profit or benefits given up by an individual or organization in order to choose or acquire something deemed significant at the time.

Simply stated, it is the cost of not enjoying the benefits, profits or value associated with the alternative forgone or best alternative choice available.

Hence, to determine the opportunity cost of something such as a trip, the best alternative forgone must be defined or known.

Therefore, in this context we cannot determine what the opportunity cost is without knowing which alternative, working or studying, you would have preferred.

For instance, if you decide to invest resources such as money in a food business (restaurant), your opportunity cost would be the profits you could have earned if you had invest the same amount of resources in a salon business or any other business as the case may be.