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Scarcity and Opportunity Cost: Question 1

Syllabus 1.3

Multiple choice 1 mark

Farida is deciding how to spend her Saturday. She has three options:

  • Work a shift at a plant nursery, earning $40.
  • Work a shift at a print shop, earning $55.
  • Attend a free community gardening workshop, which pays her nothing.

She decides to work at the print shop.

What is Farida's opportunity cost of choosing to work at the print shop?

Choose an answer to check it, then compare with the worked solution below.
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Worked solution

Step 1: List Farida’s alternatives and what each pays

  • Print shop (the option she chooses): $55
  • Plant nursery: $40
  • Gardening workshop: $0 (unpaid)

Ordering these by value: 55>40>055 > 40 > 0.

Step 2: Recall the definition of opportunity cost

Opportunity cost is the value of the single next best alternative given up when a choice is made. It is not the value of every alternative added together, and it is not the value of the option actually chosen.

Step 3: Identify the next best alternative

By choosing the print shop, Farida gives up two things: the nursery shift and the gardening workshop. Comparing what each is worth to her, the nursery shift ($40) is worth more than the free workshop ($0), so the nursery shift, not the workshop, is her next best alternative.

Step 4: State the opportunity cost

The opportunity cost of working at the print shop is the $40 wage Farida gives up from the plant nursery. It is not the $55 she earns (that is the benefit of the choice she actually makes), and it is not $0 or $95.

Final answer

Farida’s opportunity cost of choosing to work at the print shop is $40, the wage given up from the plant nursery, option C.