The Coffee Nook, a small cafe near campus, sells cappuccinos for $2.50 and Russian tea cakes for $1.00 each.What is the opportunity cost of buying a cappuccino?

Question

Quizplus · Accepted Answer

The opportunity cost is the alternative that must be given up in order to choose a certain item. In this case, if you choose to buy a cappuccino, the opportunity cost is the value of the Russian tea cakes that you could have bought instead. In this case, $2.50 ÷ $1.00 = 2.5, so for the cost of one cappuccino, you could buy 2.5 Russian tea cakes. Therefore, the opportunity cost of buying a cappuccino is 2 1/2 Russian tea cakes.

The Coffee Nook, a Small Cafe near Campus, Sells Cappuccinos