In the context of scarcity and choice, what is the opportunity cost of saving money?

• A. The risk of losing money due to inflation
• B. The total amount of money saved over time
• C. The goods and services that could have been purchased with the saved money
• D. The interest earned from saving money in a bank account

Answer: (C)

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. Identify the choice in the problem: saving money instead of spending it immediately.
3. Determine what is given up by saving money: the goods and services that could have been purchased with that money if it were spent now.
4. Recognize that opportunity cost is not about risks (like inflation) or benefits (like interest earned), but about what you sacrifice by choosing one option over another.
5. Conclude that the opportunity cost of saving money is the value of the goods and services you forgo by not spending the money immediately.