Question

John gave Margaret a $20,000 painting for her birthday. Last week, an art dealer offered to buy the painting from Margaret for $25,000. Margaret said no. The opportunity cost of her decision is Select one:

A. $20,000.
B. $25,000.
C. $45,000.
D. $5,000.
E. $0.

Answer 1

The opportunity cost of Margaret's decision not to sell the painting is $20,000.

Step-by-step explanation:

The opportunity cost of Margaret's decision is $20,000.

Opportunity cost refers to the value of the next best alternative that is forgone when making a decision. In this case, Margaret had the opportunity to sell the painting for $25,000, but she chose not to. The $20,000 represents the value of the painting that Margaret could have received if she had sold it.