Your Aunt gives you some money for your birthday and you decide to put it into your savings account instead of spending it.The trade-off of not being able to spend the money now is an example of ________ cost.

Question

Quizplus · Accepted Answer

The trade-off of not being able to spend the money now is an example of opportunity cost, which is the cost of the next best alternative use of resources. In this case, the next best alternative use of the money would be spending it, but choosing to save it instead means giving up the opportunity to use it for immediate consumption. Fixed, variable, transactional, and total costs do not apply to this situation.

Your Aunt Gives You Some Money for Your Birthday and You