A consumer with $10 needs a dress, a pair of shoes, a handbag and jewelry costing $20, $10, $7 and $3 respectively. The opportunity cost of buying the pair of shoes Is the________

Pengie

3 years ago

As the dress is too expensive for the subject's budget, therefore it is the Handbag and Jewellery.

praise456749

1 year ago

Explanation:

Opportunity cost refers to the next best alternative forgone when making a choice.

The consumer has $10 and needs to choose among a dress ($20), shoes ($10), handbag ($7), and jewelry ($3).

If they choose to buy the shoes ($10), they can no longer afford any other item.

The best alternative forgone with $10 could have been the handbag ($7) and jewelry ($3), which together also cost $10.


Correct Answer:

C. Handbag and Jewelry.