Katherine has a physics exam tomorrow. However, a free lecture by one of her favorite authors is taking place this evening. Katherine decides to attend the lecture instead of studying for her exam. Katherine's opportunity cost is:
A)the time spent listening to the lecture.
B)not relevant, since no money is involved.
C)the cost of getting to the lecture itself plus the reduction in her physics exam grade as a result of not studying tonight.
D)the time spent getting to the lecture.

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the next best alternative that must be given up when making a choice. In this scenario, Katherine's next best alternative is studying for her physics exam. Therefore, her opportunity cost includes the cost of getting to the lecture and the reduction in her physics exam grade as a result of not studying tonight. Option A and D only consider the time spent on the lecture and getting there respectively, and option B is incorrect because opportunity cost is not limited to monetary costs alone in decision making.

Katherine Has a Physics Exam Tomorrow