Spending money on a new car instead of a used car when you are on a fixed budget is an example of
A) the incursion of an opportunity cost.
B) isolating variables.
C) a bad thing to do because you run out of money.
D) living on the edge.

Question

Quizplus · Accepted Answer

Choosing to spend money on a new car instead of a used car when on a fixed budget incurs an opportunity cost, which is the potential benefits lost from choosing one alternative over another. In this case, the opportunity cost would be the other things that could have been purchased or paid for with the extra money spent on a new car. Choosing a used car would allow for a potentially lower cost and would free up money for other expenses or savings.

Spending Money on a New Car Instead of a Used