Ten Principles of Economics Algorithmic End of Chapter Grade

Ten Principles of Economics: Algorithmic End of Chapter Graded Assignment |Read Chapter 1] Back to Assignment Due Sunday 06.10.18 at 11:45 PM Attempts: 4. Problems and Applications Q4 You win $100 in a basketball pool. You have a choice between spending he money now or putt ng it away for a year in a bank account that pays 5% Keep the Highest: /1 interest. Which of the following is the opportunity cost of spending $100 now? The cost of entering the basketball pool The $105 you would have a year from now if you put it in the bank Nothing, because you won the money Grade It Now Save & Continue Continue with it saving Copyright Notices Terms of Use Privacy Notice Security Notice Accessibility OM

Solution

Option b is correct.

The$105 you would have a year from now if you put it in the bank.

Opportunity cost refers to the benefit that a person could have received before an alternative was given up when a decision is made.

Here in this situation,by spending$100 , you are giving up the alternative of having the money you would have earned in a year from now by depositnde it in the bank account that pays 5% interest.