Purchase Solution

# Opportunity cost of a decision

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Suppose you arrive at a store expecting to pay \$100 for an item but learn that a store 2 miles away is charging \$50 for it. How does the decision benefit you? What is the opportunity cost of this decision? Now suppose you arrive at a store expecting to pay \$6000 for an item but discover that it costs \$5950 at the other store. Do you make the same decision as before? Explain why.

##### Solution Summary

Suppose you arrive at a store expecting to pay \$100 for an item but learn that a store 2 miles away is charging \$50 for it. How does the decision benefit you? What is the opportunity cost of this decision? Now suppose you arrive at a store expecting to pay \$6000 for an item but discover that it costs \$5950 at the other store. Do you make the same decision as before? Explain why.

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The decision benefits me by 50 dollars on the purchase of this product. However, I will have to compare the benefit with the opportunity cost of travelling 2 miles and ...

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• BCom, SGTB Khalsa College, University of Delhi
• MBA, Rochester Institute of Technology
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