Savion's aunt gave him $25 for his birthday with the condition that Savion buys himself something. In deciding how to spend the money, Savion narrows his options down to four choices: Option 1, Option 2, Option 3, and Option 4. Each option costs $25. Finally, he decides on Option 2. The opportunity cost of this decision is

Question

Quizplus · Accepted Answer

The opportunity cost of a decision is the value of the next best alternative that was not chosen. In this case, it's the value to Savion of the option he would have chosen had Option 2 not been available.

Savion's Aunt Gave Him $25 for His Birthday with the Condition