Question

Kevin is skilled at making both bracelets and necklaces. Kevin has no preference between making bracelets or necklaces since he earns the same amount from the two activities. If the selling price of necklaces increases from $25 to $50, then Kevin's opportunity cost of making bracelet is ____________.

Answer 1

Answer: $50

Explanation: Opportunity cost is the cost of choosing one alternative over the other. When an individual chooses one option among two he losses the opportunity to have the gain from the rejected option. This loss in economics is termed as opportunity cost.

In the given case, if Kevin chooses to make bracelets then he will not be able to make necklaces and will loose $50 by doing so.

Thus, from the above we can conclude that opportunity cost for Kevin would be $50.

Answer 2

Answer:

$50

Explanation:

Kevin is skilled at making both bracelets and necklaces. Kevin has no preference between making bracelets or necklaces since he earns the same amount from the two activities. If the selling price of necklaces increases from $25 to $50, then Kevin's opportunity cost of making bracelet is $50. This is because, the price increased from $25 to $50, making $50 the new price of the bracelets and necklaces.