Andrew invested $200,000 in the shares of a company.At the end of a year,he had earned $7,000 as dividends on his shares along with a $1,000 appreciation in the overall value of his shares.However,if Andrew had invested the same amount on an asset,like gold,the appreciation in its value would have earned him $10,000 at the end of the year.In this scenario,which of the following is Andrew's opportunity cost?
A) $7,000
B) $10,000
C) $2,000
D) $200,000

Question

Quizplus · Accepted Answer

In this scenario, Andrew's opportunity cost is $10,000. Opportunity costs capture the value of the best forgone alternative use of the resources employed.

Andrew Invested $200,000 in the Shares of a Company