Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her.
FIGURE 1- 3
-Refer to Figure 1- 3.For Madeleine,the opportunity cost of one latte is
A)4 regular coffees.
B)8 regular coffees.
C)1/4 of a regular coffee.
D)80 regular coffees.
E)1/4 of a latte.

Question

Madeleine allows herself $100 per month for purchasing coffee.The diagram below illustrates the choices available to her.
  FIGURE 1- 3
-Refer to Figure 1- 3.For Madeleine,the opportunity cost of one latte is
A)4 regular coffees. 
B)8 regular coffees. 
C)1/4 of a regular coffee. 
D)80 regular coffees. 
E)1/4 of a latte.

Quizplus · Accepted Answer

The opportunity cost of one latte is the value of the next best alternative given up, which is 4 regular coffees. Therefore, Madeleine should choose to purchase 4 regular coffees instead of one latte in order to maximize her coffee consumption within her budget.

Madeleine Allows Herself $100 Per Month for Purchasing Coffee