# opportunity cost

#### nileiyen

can anyone explain why the answer is A
An individual has an appointment with his bank manager.
He has a choice between travelling to the appointment by car, or leaving the car at home and
travelling by bus and then by train. The costs of the journey are given below.
$bus fare 2 train fare 3 car parking charge 4 petrol 2 car wear and tear costs 1 Given this information, what is the opportunity cost to the individual of travelling by car rather than by bus and train? A$2 B $4 C$7 D $12 #### romeopoomore Traveling by car means he incurs all cost relating to travelling by car . Firstly he needs to fuel the car and then park it wherever he goes . Moreover the fact that he uses the car it depreciates in value(the wear and tear costs ) . So overally him using the car means he experiences costs totalling$(2+4+1)=$7 Him travelling by bus on the other hand Only makes him incur the fare charges$(3+2)=$5 And knowing the definition of opportunity cost ... Its the difference of the two alternatives and thus him travelling by car means he incurs an extra$2 being the opportunity cost thus answer is A .

If he didn't need to refuel the car then there would be no opportunity costs because the two alternatives would be equal in value