Which situation is the best example of opportunity cost?

• A. A consumer buys a product at a discounted price.
• B. A factory increases production after hiring more workers.
• C. A government prints more money to pay for public projects.
• D. A student chooses to spend an hour studying for an exam instead of going to a movie, missing out on the enjoyment of the movie.

Answer: (D)

Verified step by step guidance

1. Understand the concept of opportunity cost: it is the value of the next best alternative foregone when making a choice.
2. Analyze each option by identifying what is given up when a decision is made.
3. For the consumer buying a product at a discounted price, consider if there is a clear alternative that is sacrificed; here, the focus is on saving money rather than giving up something valuable.
4. For the factory increasing production by hiring more workers, the trade-off involves costs and benefits of additional labor, but it is more about production decisions than opportunity cost in the classic sense.
5. For the government printing more money, the trade-off involves inflation or economic consequences, but this is a macroeconomic policy choice rather than a direct example of opportunity cost.
6. For the student choosing to study instead of going to a movie, the opportunity cost is the enjoyment and experience missed by not attending the movie, which clearly illustrates the concept of opportunity cost.