Nick won a $1,000 lottery prize. He can't decide what he should spend the money on. For some time now, he has been planning to buy a gaming console, a bicycle, and a watch. But he also needs to save money for an overseas trip in the future. He can give up the bicycle and the watch, but he really wants that gaming console. On the other hand, he also wants to experience a foreign culture. In the end, he decides to save the whole amount for the trip. Which item is the opportunity cost of Nick’s trip?

The 2 important choices were:
1) buying a gaming console
2) going on an overseas trip

The opportunity cost is the gaming console. He had to give up buying the gaming console when he decided to save for the overseas trip.

The bicycle and the watch were not treated as opportunity costs because he willingly disregarded those items from his wants.

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dubeyshailja64 dubeyshailja64 · Answer 2 · 2022-07-15T15:50:21+02:00

The item which will be the opportunity cost is a gaming console.

What is opportunity cost?

Opportunity costs are the possible advantages that a person, investor, or company neglects while deciding between two options. It can be determined by making a comparison between two alternatives.

In the given case, there are four options given which include buying a gaming console, a bicycle, and a watch. Apart from that nick also wants to save money for an overseas trip.

After giving up on the bicycle and watch, he got confused over the gaming console and the trip and later decided to save the whole amount for the trip. In this case, he neglects the gaming console.

Therefore, gaming console will be the opportunity cost as it got ignored when selecting trip as decisions for saving.

Learn more about Opportunity costs, here:

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