Question

5. A woman owns a TV which she bought for $300. She is considering buying a better model for $450. Her neighbour offers her $200 for her TV. What is the opportunity cost of her rejecting this offer? A. $100 B. $200 C. $300 D. $450

Answer 1

The opportunity cost is the value of the next best alternative that must be forgone when a decision is made. In this case, the woman's opportunity cost of rejecting her neighbor's offer is the value of the neighbor's offer.

The neighbor offers $200, so the opportunity cost is $200.

Therefore, the correct answer is **B. $200.**