A university offers a free shuttle service around campus. The opportunity cost of the shuttle service to the university is equal to:
A)zero, since it is free to the students who use it.
B)the wages paid to the shuttle drivers.
C)the wages paid to the shuttle drivers plus the gasoline expenses.
D)the highest valued alternative uses of all the resources devoted to the shuttle program.
E)the cost of the shuttle plus the gasoline expenses.

Question

Quizplus · Accepted Answer

The opportunity cost of the shuttle service to the university is the value of the resources used in the shuttle program, which could have been used for alternative purposes. This includes not only the wages of the shuttle drivers and the gasoline expenses, but also the cost of the shuttle itself and any other resources used. Therefore, the best answer is D, which reflects the highest valued alternative uses of all the resources devoted to the shuttle program.

A University Offers a Free Shuttle Service Around Campus