Question

What opportunity costs did you incur in reading this chapter? If you read another chapter today, would your opportunity costs (per chapter) increase? Explain.

Answer 1

The opportunity cost of an economic activity is the amount lost in terms of not engaged in the next best alternative. For example, if a person takes a two hour break from his work which pays him a wage rate of $20 per hour, and watches a movie, then the opportunity cost of watching that movie will be $40.

If we are reading this chapter we are not using our time in other activities, the best alternative may include reading some other chapter of some other subject. Therefore the opportunity cost of reading this chapter is the time lost that could have been used in studying something other.

If another chapter is read today, this opportunity cost is going to increase because the time today is limited and, the more time spent in reading this book, the last time will be available for other subjects.