Matthew bought a 1994 Honda Civic for $2,000. A friend offered him $500 for the car last week. Matthew has been offered a job in France. Driving an old Honda from Toronto to France is not possible. His opportunity costs of the job include the $1,500 he would lose on the Honda.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the value of the next best alternative foregone as a result of making a decision. In this case, the opportunity cost of taking the job in France would include factors like the cost of moving, potential loss of other job opportunities, or personal sacrifices, not the loss on the sale of the Honda, which is a sunk cost.

Matthew Bought a 1994 Honda Civic for $2,000