A particular music store,Discs-R-Us,sells over 3,000 different compact disks.Pat's opportunity cost of choosing to purchase a compact disk by Pearl Jam
A) is zero if he does not like any other compact disk
B) is how much he would have enjoyed his second-favorite compact disk
C) depends on the compact disks not sold by the store
D) is negative
E) is how much he would have enjoyed a compact disk by Vanilla Ice

Question

Quizplus · Accepted Answer

The opportunity cost of choosing a particular compact disk is the value of the next best alternative that must be given up. In this case, if Pat chooses to purchase a Pearl Jam CD, his opportunity cost would be the value he would have received from purchasing his second-favorite CD. Option A is incorrect because it assumes Pat does not have any other preferences for CDs. Option C is incorrect because the opportunity cost of choosing the Pearl Jam CD does not depend on the CDs not sold by the store. Option D is incorrect because opportunity cost cannot be negative. Option E is incorrect because it assumes Pat has a preference for a Vanilla Ice CD.

A Particular Music Store,Discs-R-Us,sells Over 3,000 Different Compact Disks