Question

The opportunity cost of not receiving a dollar today is:

Answers:      

A. The return forfeited by receiving the dollar in the future, as measured by the interest rate.

B. The uncertainty of not receiving the dollar in the future.

C. The cost of printing and distributing the dollar.

D. The sublimation of future goals.

Answer 1

Opportunity Cost is the value of the choice in the next best alternative decision. Let's say If a person has $1000 which can be invested in X to earn 10%(ie.$100). But if that person will invest in Stock Y, the returns are 15%(ie.$150). Thus, the opportunity cost of investing in Stock X is $50($150- $100). In the same way, The Opportunity cost of not receiving a dollar today is A. The return forfeited by receiving the dollar in the future, as measured by the interest rate. The opportunity cost concept doesn't deal with Uncertainty.