Question

A college student is faced with a difficult decision of how to spend one hour tonight. She could babysit her professor's child at an hourly wage of $7; she could work at the college library at a wage of $6; or she could finish her economics homework assignment. If she chooses to complete her homework assignment, she has incurred an opportunity cost equal to:

Answer 1

The opportunity cost is equal to $7.

Step-by-step explanation:

The opportunity cost of a decision is the cost of the second-best alternative sacrificed to take up the decision.

Here, the student could babysit her professor's child at an hourly wage of $7 or she could work at the college library at a wage of $6 instead of finishing her homework.

If she chooses to complete her homework assignment, the second-best alternative is babysitting. So she is incurring the opportunity cost of $7.