Question

select the correct text in the passage. what is the opportunity cost in this scenario? harry has been very busy at work for the past two weeks. he has been working weekends too. finally, he is going to get a weekend off. originally, he planned to paint his apartment that weekend. he also considered going fishing for the weekend. but then his parents called and asked him to come for dinner because it has been a while since they have seen each other. later on, his friend theo informed him about a surprise birthday party for another friend. theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between theo, harry, and three other friends. now harry is confused about what he should do over the weekend. he decides that, for him, the most important commitments are going over to his parents house and attending his friends birthday party. in the end, harry decides to see his parents.

Explanation:

To determine the opportunity cost, we first recall that opportunity cost is the value of the next - best alternative forgone when a decision is made.

1. Harry's final decision is to see his parents.
2. The other important commitment he had was attending his friend's birthday party. Since he chose to see his parents, the next - best alternative that he gave up is attending his friend's birthday party. Looking at the text, the relevant part about the birthday party (the alternative he forgone) is: "Later on, his friend Theo informed him about a surprise birthday party for another friend. Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends." And the fact that he considered it an important commitment and then gave it up when he chose to see his parents. But more precisely, the action he forgone (the opportunity cost) related to the birthday party is attending it. However, from the text, the part that represents the opportunity cost (the alternative he didn't choose) when he chose to see his parents is the birthday party - related activity. But if we have to pick the text, the relevant text for the opportunity cost (the forgone alternative) is "Later on, his friend Theo informed him about a surprise birthday party for another friend. Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends." (since he gave up attending this party to see his parents). But actually, more accurately, the opportunity cost is the value of attending the birthday party (the next - best alternative he gave up when choosing to see his parents).

But if we are to select the text from the passage that represents the opportunity cost (the forgone option), it is the part about the birthday party that he gave up. So the correct text is: "Later on, his friend Theo informed him about a surprise birthday party for another friend. Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends." (because he decided to see his parents instead of attending this party, so this is the forgone alternative, the opportunity cost).

Opportunity cost is the value of the next - best alternative forgone. Harry chose to see his parents, and the next - best alternative he gave up was attending his friend's birthday party. The text about the birthday party (the alternative he didn't choose) is the relevant part for opportunity cost.

Answer:

Later on, his friend Theo informed him about a surprise birthday party for another friend. Theo plans to reserve a room at a restaurant for the celebration, with the cost to reserve the room split between Theo, Harry, and three other friends.