You own a car and are trying to decide whether to trade it in and buy a new car.Which of the following costs is an opportunity cost in this situation?
A)The trip to Europe that you will not be able to take if you buy the car
B)The cost of the car you are trading in
C)The cost of toothpaste and soap that you need for the next few months
D)The cost of your meals for the last week

Question

Quizplus · Accepted Answer

The trip to Europe that you will not be able to take if you buy the car is an opportunity cost because it represents the benefits that you are giving up by making this decision. The cost of the car you are trading in is a sunk cost, meaning it has already been incurred and cannot be recovered. The cost of toothpaste and soap and the cost of your meals for the last week are both irrelevant to the decision of whether or not to trade in your car.

You Own a Car and Are Trying to Decide Whether