Relevant costs marginal costing, and short-term decision making
. You own a car which cost £5,000. The car is no longer running well and you now need to make a decision. There are two alternatives. You can spend £1,000 on repairing the car or sell it to a scrap dealer for £500.
What is the opportunity cost in this situation?
When you have considered how you would answer the question select Yes to view the correct answer.

. You own a house which cost £150,000. You could upgrade this house at a cost of £75,000 and rent it out to 6 students at a total annual rental of £15,600 or you could sell it for £200,000.
What is the opportunity cost in this situation?
When you have considered how you would answer the question select Yes to view the correct answer.

. A local tennis club hires out its 4 indoor courts to members at an hourly rate of £15 per court. A local school has offered to pay an hourly rate of £7.50 per court during the daytime when no members are playing on the courts.
What is the opportunity cost in this situation?
When you have considered how you would answer the question select Yes to view the correct answer.