Question 1188344: William decided to deposit his money in a basic savings account instead of a CD. At the end of one year, his savings account had $1,100. If he had put his money in the CD, he would have had $1,400 at the end of the year. What was the opportunity cost?
$300
$1,400
$1,100
$2,600
Answer by Theo(13342)   (Show Source):
You can put this solution on YOUR website! the opportunity cost is $300.
the savings account gets him 1100 at the end of the year.
the cd would have given him 1400 at the end of the year.
he has 300 dollars less at the end of the year by choosing the savings account option rather than the cd option.
that's his opportunity cost.
the decision to put his money into the savings account rather than the cd must obviously have had to do with considerations other than money.
the only one i can think of would be the ability to withdraw from the saving account if he needed money during the year.
with the savings account, he could withdraw money without paying a penalty.
with the cd, he can still withdraw money, but will more than likely pay a penalty for doing so.
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