Which of the following illustrates an opportunity cost? 1: James has enough money to buy some socks and a book.

Which of the following illustrates an opportunity cost?

1: James has enough money to buy some socks and a book.

2: Alyssa does not have enough time to study for her test.

3: Amir only has time to study or to play basketball.

4: Lydia does not have enough money to buy a new shirt.

Answer: 3: Amir only has time to study or to play basketball.

The opportunity price represents the absolute activity that is surrendered when choices are made. With respect to Amir’s case, choosing to study means that he is giving up on the time he could have been canning basketball due to having an opportunity for leisure. On the contrary, supposing he decides to play basketball, the loss will be the time that he could rather dedicate to reading. Therefore, this situation is a case of opportunity cost because Amir faces two incompatible decisions, and the option he does not pick stands for the cost he pays for the other option he chose.

In options 1, 2, and 4, the choice of merely one alternative out of the given set is not prominently implied in the context of which opportunity cost exists.