The divergence between money costs and opportunity costs is the smallest in which of the following situations?
A)China hires millions of otherwise unemployable workers to build roads using picks and shovels.
B)Wilhelm, a petroleum engineer, is drafted, and his army salary is $1,000 per month.
C)Colleen quits her job to stay at home and raise her children.
D)A university employs a private contractor to build a field house on land it purchased at full market value from a local farmer.

Question

Quizplus · Accepted Answer

In this situation, the money cost and opportunity cost are both equal to the full market value of the land and the construction project. Therefore, there is no divergence between the two costs. In the other situations, there are differences between the money cost and opportunity cost, such as the low wages paid to workers in option A or the opportunity cost of Wilhelm giving up his higher-paying job in option B. In option C, Colleen incurs an opportunity cost of giving up her salary and potential career growth to stay at home with her children.

The Divergence Between Money Costs and Opportunity Costs Is the Smallest