Chanel has the option of purchasing one of three products: Brand A,Brand B,or Brand C.The price of each product is $10.If Chanel decides to purchase Brand A,the opportunity cost of this decision is
A)$20.
B)Brand B or Brand C,depending on which she considers to be the highest-valued alternative forgone.
C)Brand A.
D)Brand B and Brand C.
E)zero if this is a frivolous purchase with no marginal benefit.

Question

Quizplus · Accepted Answer

The opportunity cost of any decision is the highest-valued alternative forgone. Therefore, if Chanel decides to purchase Brand A, the opportunity cost is either Brand B or Brand C, depending on which she considers to be the highest-valued alternative forgone. To make the best choice, Chanel should consider her preferences and which alternative provides the most value to her.

Chanel Has the Option of Purchasing One of Three Products