How are changes in opportunity cost related to decision-making behavior?
A) The lower the opportunity cost of doing an activity X, the more likely activity X will be done.
B) The higher the opportunity cost of doing activity X, the more likely activity X will be done.
C) Changes in the opportunity cost play no role in decision-making.
D) The lower the opportunity cost of doing activity Y, the more likely activity X will be done.
E) The higher the opportunity cost of doing activity Y, the less likely activity X will be done.

Question

Quizplus · Accepted Answer

Opportunity cost is the cost of forgoing one opportunity to pursue another. When the opportunity cost of doing something is lower, it means that the benefit of doing that activity relative to the cost of what it could have been otherwise is higher. Therefore, individuals will be more likely to choose that activity. Hence, the lower the opportunity cost, the more likely an activity will be done.

How Are Changes in Opportunity Cost Related to Decision-Making Behavior