Mikki decides to work five hours the night before her economics exam. She earns an extra $75, but her exam score is 10 points lower than it would have been had she stayed home and studied. Her opportunity cost is the:

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the next best alternative that is forgone in choosing one option over the other. In this scenario, Mikki's opportunity cost is the 10 points that she lost on her exam because she chose to work instead of studying. The five hours she worked and the $75 she earned are not opportunity costs because they are the direct benefits she received from her decision to work. The time she could have spent watching television is also not an opportunity cost because it was not a viable alternative to studying for her economics exam.

Mikki Decides to Work Five Hours the Night Before Her