Which of the following would be categorised as an opportunity cost?
A.Not being able to spend your $10 000 savings if you sink the money into your business
B.The cost of purchasing supplies for your housecleaning business
C.The cost of purchasing auto insurance for your dry-cleaning delivery business

Question

Which of the following would be categorised as an opportunity cost? 
A.Not being able to spend your $10 000 savings if you sink the money into your business
B.The cost of purchasing supplies for your housecleaning business
C.The cost of purchasing auto insurance for your dry-cleaning delivery business

Quizplus · Accepted Answer

Opportunity cost refers to the cost of what you have to give up in order to pursue a certain course of action. In this case, not being able to spend your $10 000 savings is the opportunity cost of sinking the money into your business. Purchasing supplies and auto insurance are simply expenses and not opportunity costs.

Which of the Following Would Be Categorised as an Opportunity