Steve and Karen decide to watch a movie on Netflix using a promotion code so they do not need to pay for that movie. We know that
A) both bear the same opportunity cost because they are seeing the same thing.
B) both bear the same opportunity cost because the tickets have the same face value.
C) both bear an opportunity cost that depends on what each person is giving up to watch the movie.
D) neither bears an opportunity cost since neither needs to pay for the movie.

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the next best alternative that must be given up to pursue a certain action. In this case, both Steve and Karen have to give up their time and potentially other activities they could be doing instead of watching the movie. The opportunity cost will differ for each person depending on what they would have otherwise been doing. Therefore, option C is the correct answer as the opportunity cost will depend on each individual's alternative options.

Steve and Karen Decide to Watch a Movie on Netflix