QQuestionEconomics
QuestionEconomics
Which situation best describes an opportunity cost?
A. A corporation that begins selling a new product sees its overall profit increase.
B. A person decides to go back to college in order to transition into a new career.
C. A marketing company goes out of business because it could not find enough clients.
D. An employer who hires a new employee can’t hire the other people she interviewed.
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Answer
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Step 1:
The concept of opportunity cost is about giving up one opportunity to pursue another. It's about comparing the benefits of two alternatives and choosing the one that provides the greatest benefit.
Step 2:
In the case of the corporation selling a new product and seeing its overall profit increase (option A), this is not an opportunity cost. The corporation is not giving up one opportunity for another; instead, it is gaining additional benefits from a new opportunity.
Step 3:
When a person decides to go back to college to transition into a new career (option B), this is an example of an opportunity cost. The person is giving up the opportunity to use their time in other ways (such as working or spending time with family) to pursue education and a career change.
Step 4:
When a marketing company goes out of business because it could not find enough clients (option C), this is not an opportunity cost. The company is not choosing between two alternatives; it is facing a situation where neither alternative is viable.
Step 5:
When an employer hires a new employee and can't hire the other people they interviewed (option D), this is not an opportunity cost. The employer is not giving up one opportunity for another; they are simply making a choice between multiple candidates for a single opportunity.
Final Answer
The situation that best describes an opportunity cost is option B: A person decides to go back to college in order to transition into a new career.
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