Question

The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakesfor $1.00 each. What is the opportunity cost of buying a cappuccino?

A) 2 1/2 Russian tea cakes
B) 2/5 of a Russian tea cake
C) $2.50
D) $1.00

Answer 1

Answer:

D) $1.00

Explanation:

Opportunity cost is the next best option forgone when one alternative is chosen over other alternatives.

If I buy a cappuccino, I have forgone the opportunity to buy Russian tea cakes. Therefore, my opportunity cost is the price of Russian tea cakes.

I hope my answer helps you.