Fred and Ann Are Both Given Free Tickets to See

question 131

Multiple Choice

Fred and Ann are both given free tickets to see a movie. Both decide to see the same movie. We know that

• A) both bear an opportunity cost of seeing the movie because they could have done other things instead of seeing the movie.
• B) both bear the same opportunity cost of seeing the movie because they are doing the same thing.
• C) it is not possible to calculate the opportunity cost of seeing the movie because the tickets were free.
• D) the opportunity cost of seeing the movie is zero because the tickets were free.

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Definitions:

Out-of-pocket Cost

Expenses that require immediate cash payment by an individual or company.

Future Outlay

Potential future spending or investments that a company plans to make, which may impact its financial position.

Opportunity Cost

The lost potential gain from other alternatives when one alternative is chosen.

Potential Benefit

The prospective advantage or gain that may be realized from a specific action or decision, often considered in planning and analysis.