Suppose you are thinking about spending an additional hour studying for your next microeconomics exam.You should spend that extra hour studying as long as
A) The extra study time leads to a higher grade on the exam
B) Your only other alternative is spending an hour reading a novel
C) The benefit of an additional hour of study is greater than what you have to give up in order to study one more hour
D) You enjoy studying microeconomics

Question

Quizplus · Accepted Answer

The principle of opportunity cost suggests that we should choose an action if its benefits are greater than the costs. In this case, the benefit of an additional hour of study (potentially leading to a higher exam grade) should be weighed against the cost of giving up an hour spent doing something else (such as leisure, work, or other studying). Therefore, if the benefit of extra studying is greater than the opportunity cost (what you could have done instead), then it makes sense to choose to spend an additional hour studying.

Suppose You Are Thinking About Spending an Additional Hour Studying