Final answer:
The answer to question one illustrates 'opportunity cost' by assessing the value of the next best alternative that a student forgoes when choosing to attend the movies over other available activities. Opportunity cost, a key concept in economics, factors in the trade-offs involved in decision-making and the real cost associated with forgoing the next best option.
Step-by-step explanation:
The concept of opportunity cost is fundamental in economics and can be illustrated through a scenario where a student has multiple alternatives for how to spend their Friday night. The student must choose between going to the movies, seeing a concert, volunteering at a local soup kitchen, visiting their favorite grandparent, or working at a part-time job. If the student decides to go to the movies, the opportunity cost is the value associated with the next best alternative that was given up, which might be the joy of visiting their grandparent or the wages from their job, depending on what they value most.
Economists like Horton highlight that opportunity cost encompasses not just the financial cost but the real cost of what is foregone by making a decision. For example, Alphonso's choice between having a burger or bus tickets clearly depicts this; the opportunity cost of the burger is the four bus tickets he must forego. In deciding, Alphonso weighs the value of enjoying the burger against the value of the transportation that he would have to sacrifice.
Understanding opportunity costs assists in recognizing that every decision incurs a trade-off, and this principle is key in practical decision-making. It helps individuals and businesses to evaluate the relative merit of various options, leading to more informed choices.