Question

Principle: The opportunity cost of a decision is the value of the next best alternative that is forgone when a choice is made.
Facts: Shyam is an aspiring artist who has a chance to exhibit his paintings at a local gallery for two months. He can either take this opportunity, which would allow him to showcase his work and potentially sell pieces for a total profit of INR 50,000, or he can accept a temporary job offer for the same duration of two months, that would earn him INR 30,000 in total. After careful consideration, Shyam decides to exhibit his paintings at the gallery.
Which of the following statements is true regarding Shyam’s decision?

• A. Shyam’s opportunity cost for choosing to exhibit his paintings is INR 50,000, as that was the profit he could have earned from the gallery
• B. By choosing to exhibit his paintings, Shyam has no opportunity cost since he is pursuing his passion
• C. Shyam’s decision to exhibit his paintings resulted in a net gain of INR 20,000 in opportunity cost
• D. Shyam’s opportunity cost for choosing to exhibit his paintings is INR 30,000, as that was the amount he could have earned from the temporary job

Answer 1

The Correct Option is D

The opportunity cost of Shyam choosing to exhibit his paintings is the INR 30,000 he gave up by not taking the temporary job.