Ellie Decides to Spend Two Hours Taking a Nap Rather

question 85

Multiple Choice

Ellie decides to spend two hours taking a nap rather than attending her classes.Her opportunity cost of napping is

• A) the value of the knowledge she would have received had she attended class.
• B) the $24 she could have earned if she had worked at her job for those two hours.
• C) the value of her nap less the value of attending class.
• D) nothing, since she valued sleep more than attendance at class.

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Definitions:

Fixed Selling Expenses

Costs related to selling that do not change with the level of sales, such as salaries of sales staff and rent for sales space.

High-Low Method

A technique in cost accounting used to estimate fixed and variable costs based on the highest and lowest levels of activity.

Utilities Cost

The expenses incurred for essential services such as electricity, water, and gas used by a business.

Cost Formula

An algorithm or equation used to predict the costs associated with producing a certain number of units.