Ick won a $1,000 lottery prize. he can't decide what he should spend the money on. for some time now, he has been planning to buy a gaming console, a bicycle, and a watch. but he also needs to save money for an overseas trip in the future. he can give up the bicycle and the watch, but he really wants that gaming console. on the other hand, he also wants to experience a foreign culture. in the end, he decides to save the whole amount for the trip. which item is the opportunity cost of nick’s trip? a. bicycle b. gaming console c. overseas trip d. $1,000
Answers
Answer:gaming console
Explanation:
The Opportunity cost for Ick should be the Gaming console.
Explanation:
Opportunity costs can be easily overlooked or incurred if one is not careful enough.
The person or entity choosing between 2 or more options has to make the best decision which would provide him the highest rate of return on choosing that option or alternative.
For example,Mr.Gaurav had some extra money left with him at the end of a financial year and he decided to invest his money into shares.He looked for the best shares/investments which would provide him the highest percentage of returns.In the end,he found himself choosing between 2 options.
In one of the options,the company which was offering its shares to public was providing a 9% rate of return along with other incentives.
The other company(2nd option) was providing a 12% rate of return without any incentives.
Now,in the end Mr.Gaurav chose the 2nd option as it had the higher rate of return but he lost the opportunity to invest in the 1st company and lost his incentives.
Therefore,in this case the Opportunity cost for Mr.Gaurav would be the chance to invest in 1st company.
Similarly, In the given case, Ick lost the oppotunity to buy himself a gaming console since he used that money for a foreign trip.