A city is evaluating a proposal to build a recycling depot. If a generous citizen is willing to donate land for the project with a current market value of $800,000, the ________ of the land is ________.
A) social opportunity cost; $0
B) social opportunity cost; unknown
C) private cost to the city; $800,000
D) social opportunity cost; $800,000

Question

Quizplus · Accepted Answer

The social opportunity cost is the value of the next best alternative foregone, which in this case is the opportunity cost of using the land for an alternative purpose, such as a park or a community center. Therefore, the social opportunity cost of the land is $800,000, which is the current market value of the land. The private cost to the city would be zero, since the land is being donated by a generous citizen.

A City Is Evaluating a Proposal to Build a Recycling