Which scenario is the best example of an opportunity cost?

• A. A student chooses to spend an hour studying for an exam instead of going to a movie, giving up the enjoyment of the movie.
• B. A government sets a price ceiling on gasoline.
• C. A company increases production after hiring more workers.
• D. A consumer buys a product at a discounted price.

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of opportunity cost. Opportunity cost is the value of the next best alternative that is forgone when making a choice.
2. Step 2: Analyze each scenario to identify if it involves giving up one option to gain another, which is the essence of opportunity cost.
3. Step 3: For the scenario where a student chooses to study instead of going to a movie, recognize that the student sacrifices the enjoyment of the movie to gain study time, which clearly illustrates opportunity cost.
4. Step 4: For the other scenarios (government price ceiling, company hiring more workers, consumer buying discounted product), note that they describe economic actions or outcomes but do not explicitly involve a trade-off between alternatives in the same way.
5. Step 5: Conclude that the best example of opportunity cost is the student's choice because it directly involves giving up one benefit (movie enjoyment) to gain another (study time).