Joe sold gold coins for $1,000 that he bought a year ago for $1,000. He says, "At least I didn't lose any money on my financial investment." His economist friend points out that in effect he did lose money because he could have received a 3 percent return on the $1,000 if he had bought a bank certificate of deposit instead of the coins. The economist's analysis in this case incorporates the idea of
A)opportunity costs.
B)marginal benefits that exceed marginal costs.
C)imperfect information.
D)normative economics.

Question

Quizplus · Accepted Answer

The economist's analysis incorporates the idea of opportunity costs, which refers to the benefits that Joe missed out on by choosing to invest in gold coins instead of a more profitable alternative, such as a bank certificate of deposit with a 3 percent return.

Joe Sold Gold Coins for $1,000 That He Bought a Year