A small business owner is planning to purchase a new office computer for $1,000. The opportunity cost of purchasing this computer is:
A)$900
B)$1,000
C)$1,100
D)Unknown, since we do not know the owner's next best alternative.

Question

Quizplus · Accepted Answer

The opportunity cost of purchasing the computer is the value of the next best alternative that is forgone. In this case, we are given that the small business owner is planning to purchase the new office computer, which implies that they have already made the decision to allocate $1,000 towards purchasing a computer. Therefore, the opportunity cost of purchasing the computer is the cost of the next best alternative, which is zero. None of the other answer choices reflect this reasoning. The opportunity cost is the value of the next best alternative that must be given up to pursue the chosen option. In this case, the best alternative use of the $1,000 could be investing it in something that would generate a return, such as a stock or bond, or spending it on something else the business needs, such as marketing or inventory. Since the business owner has already made the decision to purchase the computer, the opportunity cost is equal to the actual cost of the computer, which is $1,000. Therefore, the correct answer is B.

A Small Business Owner Is Planning to Purchase a New