Which of the Following Is an Example of Opportunity Cost

question 42

Multiple Choice

Which of the following is an example of opportunity cost?

• A)Renting an apartment near school
• B)Saving money instead of taking a vacation
• C)Setting aside money for paying income tax
• D)Purchasing automobile insurance
• E)Using a personal computer for financial planning

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Definitions:

Framing Effects

Cognitive biases where people's decisions are influenced by the way information is presented, rather than the information itself.

Prospect Theory

A behavioral economic theory that describes how people choose between probabilistic alternatives that involve risk, where the probability of outcomes is uncertain.

Investment Return

signifies the gain or loss on an investment over a specified period, usually expressed as a percentage of the investment's cost.

Endowment Effect

A psychological phenomenon in which people value an owned object higher than a similar object they do not own.