20.3.1. Opportunity Cost

Try these first

1. 1.

   What does opportunity cost refer to?

   Hint

   Think about what you give up when you make a choice.

2. 2.

   Provide an example of opportunity cost.

   Hint

   Consider decisions about your time.

3. 3.

   What does opportunity cost represent?

   • A. The profit earned
   • B. The benefit lost from the next best alternative
   • C. The cost of resources

   Hint

   Think about alternatives you consider before deciding.

4. 4.

   True or False: Opportunity cost only refers to financial loss.

   • True
   • False

   Hint

   Consider other factors beyond money.

5. 5.

   A company has to decide between investing ₹1,000,000 into research and development or marketing. Calculate the opportunity cost if the expected return on R&D is ₹200,000 and from marketing is ₹300,000.

   Hint

   Compare the potential returns from both options.

6. 6.

   If a student spends four years in college for a degree while having had the opportunity to work full-time earning ₹500,000 annually, calculate the total opportunity cost assuming the degree leads to a ₹700,000 per year job afterwards.

   Hint

   Take into account the total income over the four years versus what the degree leads to.