Question

Ethan received a gift card and was considering three options: digital camera, cell phone, and video games. After carefully thinking about it, Ethan narrowed his decision down to the digital camera and the cell phone. Finally, Ethan chose the cell phone. In 3-5 sentences, define opportunity cost and trade-off and then explain the opportunity cost and trade-off of Ethan's decision.

Answer 1

The opportunity cost is the camera, it was the next best thing.  His trade-off was the video games.  An opportunity cost is the next best thing in line.  A trade-off is the option eliminated first, there can be many trade-offs but only 1 opportunity cost.