> > Kevin has \$20 to spend on summer clothes.

# Kevin has \$20 to spend on summer clothes.

## He is looking at shirts, shorts, and flip-flops. Shirts are \$10, s...

109 Views

### Kevin has \$20 to spend on summer clothes.

He is looking at shirts, shorts, and flip-flops.
Shirts are \$10, shorts are \$15, and flip-flops are \$10.
He buys one shirt because he thinks that buying the shirt is worth the opportunity cost of the shorts and the flip-flops.
Which statement best evaluates his reasoning?
Kevin has analyzed the situation well.
He purchased a shirt and that purchase cost the opportunity of buying the shorts or flip flops.
Kevin was wrong in his analysis.
He has confused opportunity costs with trade-offs by thinking of both of the lost items as opportunity costs.
Kevin was wrong in his analysis.
The opportunity cost consists of more than the shorts and flip-flops.
It also includes other choices he could have made with the \$10.
Kevin has analyzed the situation well.
However, he should also consider the fact that he saved \$10 by only purchasing the shirt.

Kevin has analyzed the situation well.
However, he should also consider the fact that he saved \$10 by only purchasing the shirt.
Opportunity cost is the cost of the forgone alternative.
Out of the 3 choices, he only purchased 1 of the choices, the opportunity cost are the other two choices.
However, he is still capable of buying the flip-flops costing \$10 but he chose not to do so.
He should consider it as a savings aside from it being a lost opportunity.