Question

You have $20 in your wallet. You have a choice between using this amount to enter a baseball pool, which will give you the opportunity to win $80, and spending the money on buying something else.

Which of the following is the opportunity cost of entering a baseball pool with $20?
A. The opportunity of winning $80.
B. The value you could obtain by spending the money on buying something else.
C. Nothing, because you would spend the money anyway.

Answer 1

The opportunity cost of entering a baseball pool with $20 is the value you could obtain by spending the money on buying something else.

Step-by-step explanation:

The opportunity cost of entering a baseball pool with $20 is the value you could obtain by spending the money on buying something else. Option B, 'The value you could obtain by spending the money on buying something else,' is the correct answer. Opportunity cost refers to the value of the best alternative that is forgone when a decision is made. In this case, if you choose to enter the baseball pool, you are giving up the opportunity to use that money for another purpose, such as buying something you need or saving it.