Question

in the example provided, which of the following was the “opportunity cost” of choosing to pay off the credit card?

Answer 1

It’s B. Using the money as a down payment on a house.


An opportunity cost is when you have two financial decisions and you have to choose one or the other. Whatever you don’t choose is the opportunity cost.

For example. I have 3 dollars. I can either afford a bag of chips or a bottle of coke. I choose the bag of chips. The bottle of coke is my opportunity cost.