King Taco charges the same price for everything on its menu: $5 will buy a taco, a burrito, or nachos. You buy the burrito and think that if you had not purchased the burrito, you would have purchased the taco. The opportunity cost of the burrito is:
A)$5.
B)your forgone enjoyment of the taco.
C)$5 and your forgone enjoyment of the taco.
D)$5 and your forgone enjoyment of the taco and the nachos.

Question

Quizplus · Accepted Answer

The opportunity cost is the value of the next best alternative that you did not choose. In this case, the next best alternative is the taco. Since both the burrito and taco cost $5, the opportunity cost of the burrito is the forgone enjoyment of the taco. The cost of the nachos is not relevant to the decision between the burrito and taco, so D is incorrect. A is incorrect because the opportunity cost includes the forgone enjoyment of the taco, not just the cost of the burrito itself.

King Taco Charges the Same Price for Everything on Its