Question

Dana, who is a trained yoga instructor, spends 4 hours on Monday baking and packing 10 boxes of cookies. She sells the cookies for $10 a box. Given that she can also teach yoga for $80 an hour, what is her opportunity cost of baking cookies?A. $220 B. $800 C. $320 D. $420 E. $100

Answer 1

Answer:

c. $320

Explanation:

Opportunity cost is an economic term for expressing cost in terms of forgone alternatives. The opportunity cost of Dana is calculated as;

Hours spent baking cookies = 4 hours, the amount earned per hour when Dana is working as yoga instructor = $80.

Therefore, the total opportunity cost of Dana, when she is baking is cookies;

= 4 hours × $80

= $320.