In terms of money management decisions,an example of an opportunity cost includes:
A)Spending for current living expenses increases the amount you have for saving and investing.
B)Saving and investing for the future reduces the amount you can spend now.
C)Buying on credit results in payments later and increases the amount of future income available.
D)Using savings for purchases results in additional interest earnings.
E)Comparison shopping can cost you money and time.

Question

Quizplus · Accepted Answer

Opportunity cost is the cost of a decision in terms of the next best alternative forgone. In this case, choosing to save and invest for the future (next best alternative) means reducing the amount you can spend now (opportunity cost). Therefore, the best choice is B.

In Terms of Money Management Decisions,an Example of an Opportunity