You Decide to Take a Vacation and the Trip Costs

question 280

Multiple Choice

You decide to take a vacation and the trip costs you $2,000. While you are on vacation, you do not report to work where you could have earned $750. The opportunity cost of the vacation is

• A) $750.
• B) $2,750.
• C) $2,000.
• D) $1,250

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Definitions:

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with less costly alternatives.

Higher Wage

Refers to an increase in the amount of money that an employee receives for performing one hour or another standard unit of work.

Leisure Time

Free time that an individual can spend away from work, chores, and other compulsory activities, often used for relaxation or hobbies.

Labor Supply Curve

A visual diagram illustrating how the quantity of labor supplied is influenced by changes in the wage rate.