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25 April, 22:37

For high school graduation, Ryan's family is giving him a choice between two presents that are both worth $900. He can choose either a new laptop that's loaded with graphic design programs he will need for art school, or he can choose to go to a surf camp in Mexico with three of his best friends from high school. What is the opportunity cost of Ryan chooses the laptop?

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  1. 25 April, 23:07
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    Answer: The Mexican trip with his best friends

    Explanation:

    Ryan cannot choose both options and thus has to make a decision of which option to take. Therefore he automatically sacrifices the other option. This type of decision is relevant and is known as a relevant cost. Relevant costs are costs that differ between alternatives, and thus influence the decision that you will make.

    Opportunity cost is a type of relevant cost. This is the option that is given up / sacrificed when one option (laptop) is chosen over another (Mexican trip). In this case the opportunity cost is the Mexican trip when the laptop is chosen.
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