Question

A consumer must decide between purchasing a new television or a new computer. If the consumer chooses the television, then what is the opportunity cost of this decision?

a.The opportunity cost is the difference between the benefit from purchasing the television and the benefit from purchasing the computer.
b.The opportunity cost is the difference between the benefit from purchasing the television and the benefit from purchasing the computer.
c.The opportunity cost is the difference in price between the television and computer.
d.The opportunity cost is the consumer's benefit from purchasing the television.
e.The opportunity cost is the consumer's benefit from purchasing the computer.

Answer 1

The opportunity cost of choosing a new television over a new computer is the consumer's benefit from the possible purchase of the computer. Opportunity cost represents the value of the next best alternative forgone.

Step-by-step explanation:

If a consumer chooses to purchase a new television instead of a new computer, the opportunity cost of this decision is the benefit that would have been received from purchasing the computer. The correct answer is (e), the opportunity cost is the consumer's benefit from purchasing the computer. Opportunity cost is an important concept in economics that refers to the value of the next best alternative that is forgone when making a decision. It is not the difference in price or the benefit of the chosen item, but rather the value of the best alternative that is given up. So, in this case, by choosing the television, the consumer gives up the benefit they would have received from having a new computer, and that foregone benefit is the opportunity cost of their decision.