Question

I would save the $10 I need to park my car at school. I also may work 10 hours today and make $60, if only I can skip class today." The opportunity cost of not skipping class today is:

A) $610
B) $4
C) $44
D) $70

Answer 1

The opportunity cost of not skipping class is $70, which is the combination of the $60 the student would earn from working plus the $10 needed for parking at school. The correct answer is D) $70.

Step-by-step explanation:

The opportunity cost of not skipping class today is the loss of earnings that the student would have made if they had chosen to work instead of attending class. The student states they could make $60 by working 10 hours, and they also need $10 for parking at school, summing up to $70 in total. Therefore, by attending class and not working, the student forgoes the possibility of earning this money. The correct answer is D) $70, as opportunity cost includes both the direct cost of parking and the potential earnings from work.

Understanding opportunity costs is important as they represent the benefits we forego when we make a choice to pursue one alternative over others. As shown in the example provided about daily lunch expenses, recognizing opportunity costs might lead individuals to change their behavior if they consider what they could accomplish with the accumulated savings, like affording a vacation.