Suppose Mike has three hours of time to spend so he ranks the following activities in order of priority: (1) see a movie, (2) attend a ball game, (3) study economics. Assume that each activity takes three hours. What is Mike's opportunity cost of seeing a movie?
A) attending a ball game and studying economics
B) studying economics
C) attending a ball game
D) either attending a ball game or studying economics

Question

Quizplus · Accepted Answer

The opportunity cost of an action is the value of the next best alternative foregone. Since Mike ranks attending a ball game second, it is the next best alternative he gives up to see a movie, making it the opportunity cost.

Suppose Mike Has Three Hours of Time to Spend So