Question 2
Basic ConceptsAbubakar has the choice of buying either a house or a Mercedes Benz car for ₦ 1m plus ₦ 0.5m running cost. If he decides to buy the Mercedes Benz car, his opportunity cost is
- A.₦ 1.5m
- B.₦ 2.0m
- C.the house
- D.the car.
Show the answer and explanation
Answer: C (the house)
Explanation
Opportunity cost is the best alternative given up, not the money spent. Buying the car means giving up the house.