Question

5

Select the correct text in the passage.
What is the opportunity cost in this scenario?
Mikael has saved $4,000 for his trip to Brazil. He has calculated that his total transportation expenses will be $1,000. The hotel will cost him
another $1,500. He will spend about $500 on food. He plans on spending the remaining $1,000 for sightseeing and buying souvenirs.
While booking his plane ticket, he realizes that the price has gone up. His total transportation expenses will go up by $200. He realizes that he
cannot cancel his hotel reservation. He also doesn't want to go cheap on food. Finally, he decides to give up visiting the popular Ouro Preto
during his stay in Brazil.
Reset
Next

Answer 1

Answer: sightseeing

Step-by-step explanation:

Opportunity costs represent to the potential benefits that an economic entity misses out on when another alternative is chosen over another.

In this case, due to the increase in the price of the plane ticket, Mikael decides to give up visiting the popular Ouro Preto during his stay in Brazil even though it was earlier planned. Therefore, it can be infered that sightseeing is the opportunity cost as that is what he forgoes in order to choose a different alternative.