Answered: Bob has to make a choice between three…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Question

Bob has to make a choice between three mutually exclusive options. He ranks these options from best (1) to worst (3). Because Bob is rational, he chooses the best option (1). The opportunity cost of Bob's decision is defined by

the summed values of options 2 and 3

the average values of options 2 and 3

the value of option 2

the value of option 3

Expert Solution

Step 1: Define key term:

Opportunity cost :

Opportunity cost refers to the value of the next best alternative forgone when a decision is made to allocate resources to a particular choice. It represents the benefits that could have been obtained if the resources were used in the next best alternative.

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions