Question

John works part-time for a moving company and earns a total of $116 each weekend. A friend invites him to go on a cruise next weekend that will cost him a total of $415. If he goes on the trip he will not be able to work. What is John’s opportunity cost of going on the trip? Enter a whole number with no dollar sign.

Answer 1

Answer: $116

Explanation: Opportunity cost refers to the loss of profit by an individual or a firm when one chooses to go for best alternative instead of the second best alternative.

In the given case, John has two alternatives and if he chooses to go on the trip it would cost him the loss of $116 salary that he receives.

Thus the opportunity cost of going on the trip would be $116.