Question

O Olivia has been looking for a new apartment and finds two apartments that fit her requirements and budget. Apartment A is in the city center and is close to her office. Apartment B is in the suburbs, and it will take an Ohour each day for Olivia to commute from Apartment B to her office. Both the apartments cost $25,000. o However, apartment A is located in a noisy and polluted neighborhood, whereas apartment B is located ina green and pollution-free locality. The opportunity cost of choosing apartment A over apartment B is: O a. the price of apartment B. O b. the extra commute time from office. Oc. the cost of furnishing apartment A O d. the green and pollution-free locality.

Answer 1

As the price of both the apartment is the same so the price of apartment B is not the opportunity cost of apartment B. Opportunity cost is what we give up to get another alternative. Here, apartment B is located in green and pollution free locality. But apartment A is located in the polluted and noisy area. So to live in apartment A Olivia has to sacrifice the pollution free environment. Therefore the opportunity cost of choosing apartment A is the green and pollution free locality. Option d is correct.