A school girl who needs a book and mirror, each coasting five naira, decides to purchase the book instead of the mirror since she cannot pay for the two at ...
Question 1 Report
A school girl who needs a book and mirror, each coasting five naira,
decides to purchase the book instead of the mirror since she cannot pay
for the two at the same time. Determined the real cost of her book.
Answer Details
The real cost of the book is the opportunity cost of choosing to buy the book instead of the mirror. Opportunity cost is the cost of the next best alternative that must be forgone in order to pursue a certain action. In this case, since the girl cannot pay for both the book and mirror, she has to choose between them. By choosing to buy the book, the opportunity cost is the value of the mirror which she could have purchased instead. Therefore, the real cost of her book is the value of the mirror which is also five naira.
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