The Coffee Korner, a small cafe near campus, sells lattes for $3.00 and biscotti for $1.50 each. What is the opportunity cost of buying a latte?

Question

Quizplus · Accepted Answer

The opportunity cost of buying a latte is the value of the next best alternative that you could have purchased with that $3.00. Since a biscotti costs $1.50, you could have purchased two biscotti instead of one latte. Therefore, the opportunity cost of buying a latte is 2 biscotti.

The Coffee Korner, a Small Cafe near Campus, Sells Lattes