Question

1. Paul receives $300 as a birthday gift. In deciding how to spend the money, he narrows his options down to four choices, Option A, Option B, Option C and Option D. Each option costs $200. Finally, he decides on Option B. The opportunity cost of Option B?

2. The average cost per seat on a bus trip from Montreal to Toronto is $140. If no refreshments are served and 3 seats are empty, the bus company could increase its profit only if it

can someone please explain and tell me what is the answer to the question

Answer 1

1) The opportunity cost the value of the next best alternative

In choosing Option(B), the opportunity cost of this option is equal to the value to Paul of the option he would have chosen if the option(B) would not have been available to him.

2) The bus company can increase its profit by selling the remaining tickets at any price above $0 which will increase its revenue.