If a consumer's fixed income increases, his opportunity cost also increases.

Question

Quizplus · Accepted Answer

Opportunity cost is the choice of giving up the next best alternative when a decision is made. If a consumer's fixed income increases, he has more resources to allocate towards different choices. This means the opportunity cost of choosing one option over another may decrease as there are more resources available to make multiple choices. Therefore, if a consumer's fixed income increases, his opportunity cost may decrease, not increase.

If a Consumer's Fixed Income Increases, His Opportunity Cost Also