Answer to Question #55233 in Microeconomics for urmat

Question

You win \$100 in a basketball pool. You have a choice between spending the money now or putting it away for a year in a bank account that pays 5 percent
interest. What is the opportunity cost of spending the \$100 now?

Answer 1

In one year I get $105, so if I spend $100 now, without putting it in a bank account, the opportunity cost of such step is $105-$100=$5.