This is the final exam for Opportunity Cost. It pulls together everything: the precise definition — the value of the single next-best alternative you forgo — the split between explicit and implicit costs, the reflex of asking “compared to what?”, the scarcity that makes opportunity cost exist at all, real trade-offs versus the false either/or, the non-monetary and sunk-cost traps, and the worked cases with their exact numbers. Take your time and reason each question through; several look easy until you spot the trap — comparing to zero, adding up every forgone option, or honouring a cost that’s already spent.
How this exam works
Read carefully — this exam is final. Each question appears one at a time. Once you submit an answer it is locked for good: there’s no going back, no retry, and no restart. Your score is hidden until the end, where you’ll see a pass/fail verdict. The pass mark is 70%. A few questions ask you to select all correct answers.
What is the cleanest definition of opportunity cost?
Select an answer to continue.
Course Recap
Big picture
Opportunity cost, in one picture
- Opportunity Cost
- The real cost
- The next-best forgone alternative — explicit cash plus implicit forgone value, never the sticker price or zero
- Compared to what?
- Judge every choice against its best alternative, never against nothing — build the menu first
- The budget of everything
- Scarcity is the cause: money, time, attention, energy are finite, so every yes is a no (168 hours/week)
- Trade-offs & traps
- Real trade-offs vs false either/ors; watch the non-monetary costs and ignore the sunk ones
- Worked cases
- Cash vs invest, 18% debt, the $95k job, the roadmap — where the cheaper option turns out costlier
- The real cost
Key takeaways
Opportunity cost is the habit of pricing the road not taken: the true cost of anything is the value of the single next-best alternative you gave up — explicit cash plus implicit forgone value — never the sticker price and never zero. Make it a reflex by always asking “compared to what?”, judging a choice against its best alternative rather than against nothing, and remember why the model exists at all: scarcity. Money, time, attention, and energy are finite, so every yes is a no. Respect genuine trade-offs while refusing the false either/or, count the non-monetary costs (time, stress, health, optionality) that make the cheap-looking choice the expensive one, and ignore sunk costs entirely — they’re spent, so look forward, not back. The worked cases prove it: the “safe” cash, the 18% debt, the higher salary, the shippable feature — each one only reveals its true cost the moment you ask what you gave up to get it. Compared to what? is the whole course in three words.