Question

Which of the following would not be considered an opportunity cost of paid employment?

• A. Education
• B. Self-employment
• C. Leisure
• D. Transportation costs of commuting to work

Hint:

Separate what you give up from what you actually pay out of pocket.

Answer 1

The Correct Option is D

Step 1: Opportunity cost is the value of the next best alternative given up when a choice is made. Step 2: If someone takes paid employment, they give up the time they could have spent on self-employment, on leisure, or on continuing their education, so options 1, 2 and 3 are all opportunity costs. Step 3: Transportation costs to commute to work are a direct out-of-pocket expense caused by taking the job, not a foregone alternative, so this is an explicit cost, not an opportunity cost. The answer is option 4.