Question

Suppose a food pantry received a donation and allowed volunteers to vote on how the funds were to be spent. Three options were provided, with the donation only covering the cost of one project. The projects included improvements to the building, additional purchases of food, and purchasing a vehicle for food delivery. The majority of volunteers voted for purchasing additional food, with purchasing a vehicle coming in second. Since only one project could be funded, what is the opportunity cost of the decision to purchase additional food

Answer 1

The opportunity cost of the decision to purchase additional food is the lost benefit that would have been derived if the decision was to purchase a vehicle for food delivery.

Step-by-step explanation:

The opportunity cost in this scenario is the forgone benefit that would have been derived by the purchasing of a vehicle for food delivery, which was the second best option not chosen. In evaluating opportunity costs, the costs and benefits of every available option (improvements to the building, additional purchases of food, and purchasing a vehicle for food delivery) must be considered and weighed against the others. Since building improvements are ruled out, the decision choice is between purchasing a new vehicle and additional purchases of food.