Question

QUESTION 6 A friend offers to give you her slightly used bike as a gift. The bike cost your friend $300, but you would get it as a gift. It would cost you $10 to take an Uber (your only means of transport) to your friend's house to pick up the bike, after which you would ride. it to your home. If you rejected the gift and so did not pick up the bike, you would work at your part-time job for two hours at $200 an hour. YOUR opportunity cost of accepting the gift is $. Send a chat O a. 10 O b. 50 O c. 300 O d. 350

Answer 1

Answer

B)50

Since the opportunity cost is income which is forgone due to accepting proposal and in this case proposal is accepting bike as a gift from friend.

If we accept bike we have to forgo part-time job for 2 hours which will cost $20 x 2 hours = $40

Further since we've to pay for Uber also that will cost $10.

Therefore total opportunity cost will be $40+$10=$50.

Note :- since opportunity cost is income which is forgone therefore conceptually only $40 is included because $10 is cost not opportunity cost(income forgone) . So conceptually this question is not correct.

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