Question

alternatives
going for a run\tgoing out to eat with friends
benefits\tburning calories, getting in better shape\thaving fun with friends, eating a tasty dinner
benefits foregone\thaving fun with friends, eating a tasty dinner\tburning calories, getting in better shape
what is bobs opportunity cost if he decides to go out to eat with friends?
○ having fun with friends
○ getting exercise
○ the money saved by not going out
○ the money spent on the dinner
question 3
2 pts
to conduct a cost/benefit analysis, a sensible person would most likely
○ compare known costs to unknown benefits.
○ compare marginal costs to marginal benefits.
○ compare previous costs to previous benefits.
○ compare unknown costs to known benefits.

Explanation:

First Question (Opportunity Cost for Bob)

Opportunity cost is the benefit foregone when choosing one alternative over another. If Bob goes out to eat with friends, he gives up the benefits of going for a run, which include burning calories and getting in better shape (i.e., getting exercise). "Having fun with friends" is a benefit of going out, not foregone. The money saved or spent relates to explicit costs, not opportunity cost.

In cost - benefit analysis, a sensible person compares marginal (additional) costs and marginal (additional) benefits. Comparing known to unknown, previous to previous, or unknown to known is not logical. Marginal analysis focuses on the next unit's cost and benefit.

Answer:

B. getting exercise

Second Question (Cost - Benefit Analysis)