Question

Looking to invest in his first pair of dress shoes, Sean is deciding between a pair of slip-on shoes and a pair of traditional lace-up wingtips. In this case, the slip-ons cost $50 more than the wingtips. Which of the following should be included in the opportunity cost of buying the slip-ons?
a. the classic, snazzy look that comes with wearing wingtips.
b. the pride that comes with wearing a pair of wearing wingtips Alden shoes.
c. the savings that would come from buying the wingtips.
d. the no-lace convenience of slip-ons.
e. the money that would be spent to buy the wingtips.

Answer 1

The option that should be included in the opportunity cost is c. the savings that would come from buying the wingtips.

What is Opportunity Cost?

• Arises from the fact that scarcity forces us to pick an alternative over another.
• Is quantified as the benefit of an alternative that is foregone when we pick another alternative.

The benefit that would be foregone in picking the slip-ons would be the $50 saving that Sean would have made had he picked the wingtips.

In conclusion, option C is correct.

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