Practice question · Multiple choice
A student turns down a €30,000 job to study, paying €10,000 in fees. Why is the opportunity cost €40,000 rather than €10,000 or €70,000?
Hints
- You can only take one alternative, so only one can be forgone.
- Count what leaves your pocket AND what never arrives in it.
Show the answer
D. Because it is the fees plus the single best forgone alternative
Why
Opportunity cost is explicit plus the best implicit alternative. Adding up every rejected option double-counts, because taking one would have ruled out the rest anyway.
Practise Opportunity Cost
The app has 7 more questions on this lesson, and keeps your place in the course. Business I is free to start.
More questions on Opportunity Cost
- A firm owns its warehouse outright and books zero rent, concluding the storage operation is profitable. What…
- An entrepreneur quits a 40,000€/year job and pays 25,000€/year in business expenses. The business brings in…
- Sort each cost by its nature in the decision at hand.
- Match each decision to its most important opportunity cost.
- You bought a 30€ cinema ticket (non-refundable). An hour before the film, a friend offers a free concert…