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Holly used savings to pay for the books for her college courses. In choosing to take...

Holly used savings to pay for the books for her college courses. In choosing to take money from her savings she gives up the interest that could have been earned on that investment. What is this trade-off called?

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Answer #1

The trade off is called opportunity cost. Opportunity cost is defined as benefits an individual loses out on when choosing one alternative over another. In this case, individual decided to pay for books from money which could have earned interest if deposited in account. Hence, it is opportunity cost

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