Question

By taking summer courses, you can graduate a semester early; the principle underlying this is ____________:

a) incentives work
b) resources are scarce
c) government policies impact on spending
d) opportunity cost

Answer 1

The correct answer is letter "D": opportunity cost.

Step-by-step explanation:

Opportunity cost can be defined as the return obtained after choosing one option over another. In other words, it is what is left on the table after deciding to do one thing instead of taking a different choice. Evaluating all the possible options before making a decision is helpful to obtain the highest opportunity cost available.

In the example, graduating a semester early is the opportunity cost of taking summer classes. There are other several possibilities the student could have taken as traveling during summer vacations or simply relaxing.