Asked by
Nikkaela Espinosa
on Oct 13, 2024
Verified
If you kept your money under your mattress rather than keeping it in a savings account at your local bank,
A) you would not incur an opportunity cost.
B) the opportunity cost of such an action would be the forgone interest of not putting the money in a savings account.
C) the opportunity cost of such an action would be the gas money it took to drive to the bank.
D) None of the choices are true.
Opportunity Cost
The cost of forgoing the next best alternative when making a decision, representing the benefits one could have received by taking the alternative action.
Forgone Interest
The potential interest earnings lost by choosing one investment over another or by keeping money in a non-interest-bearing account.
- Describe the idea of opportunity cost when decisions are made.
Verified Answer
PC
Learning Objectives
- Describe the idea of opportunity cost when decisions are made.