Question

Tonight I can either (1) go out to dinner and a movie, or (2) cook dinner for some friends, or (3) eat a hamburger at the baseball game. I prefer to do (1), then (2), and finally (3) if I can only do one. If these are my best choices and the dollar cost of each is the same, what would be the opportunity cost of my going out to dinner and a movie?
A. A hamburger at the baseball game.
B. Cooking dinner for some friends.

Answer 1

Answer:

B. Cooking dinner for some friends.

Explanation:

Opportunity cost is the cost of next best alternative sacrifised while choosing an alternative.

Eg- If I like Chapati more than rice, rice more than bread - opportunity cost of chapati is only rice & not bread.

If my preferences are 1 > 2 > 3  ; {'>' implies 'preferred over'}

Then the opportunity cost of my 1st preference i.e going out to movie & dinner is the 2nd best preference i.e Cooking dinner for some friends.

Hamburger at base ball game i.e 3rd preference is opportunity cost of 2nd preference i.e Cooking dinner for some friends.