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4 July, 22:09

Barb's aunt gave her $100 for her birthday with the condition that Barb buy herself something. In deciding how to spend the money, Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D. Each option costs $100. Finally she decides on Option B. The opportunity cost of this decision is

a. the value to Barb of Options A, C and D combined.

b. $100.

c. the average of the values to Barb of Options A, C, and D.

d. the value to Barb of the option she would have chosen had Option B not been available.

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Answers (1)
  1. 5 July, 01:46
    0
    The correct answer is option d.

    Explanation:

    Barb's aunt gave her $100 for her birthday with the condition that Barb buys herself something.

    Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D.

    The cost of each option is $100.

    She finally decides to go for option B.

    In this situation, her opportunity cost for choosing option B will be the second-best alternative or the value of the option she would have chosen had Option B not been available.

    Opportunity cost of an economic decision is the the cost of second best alternative that the person has to give up in the process of making decision.
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