You can either spend your summer working for $10,800 or go in a European vacation.If you work,your expenses will be about $1,500.If you go to Europe,the airfare,hotel,food and miscellaneous expenses will total about $10,000.What's your opportunity cost of visiting Europe?

Question

Quizplus · Accepted Answer

The opportunity cost is the value of the next best alternative option that is forgone. In this scenario, if you choose to go on the European vacation, the opportunity cost is the $10,800 you could have earned by working. Therefore, the opportunity cost of visiting Europe is:

$10,800 (earnings if you work) + $1,500 (expenses if you work) = $12,300

However, the total cost of going to Europe is $10,000, so the opportunity cost is:

$10,000 (cost of Europe) + $10,800 (earnings if you work) + $1,500 (expenses if you work) = $22,300

Therefore, the best choice would be to work and earn the $10,800.

You Can Either Spend Your Summer Working for $10,800 or Go