Suppose a friend is trying to decide whether to purchase a car. use what you know about opportunity cost to your friend arrived at a wise decision.

ANSWER: There are a lot of opportunity costs than buying a car. If a friend of mine decides to buy a car, I would help him take a decision at the best. There are lot of other modes of transportation which I will like to try to make him understand rather than buying a car and investing a lot of money in it.

1. Public Transportation: Public Transportation like bus, trains are one of the safest and cheapest way to travel. It also provides a good way of connectivity for every traveler. Majority of the population prefers using a public transport rather than using a personal vehicle.

2. Cabs: Taking a cab is also a good way of transportation. Cabs give a feel of personal vehicle without giving the burden of owning a personal vehicle.

3. Vehicle Pooling: There is also an option to share vehicles with others this is called Vehicle Pooling. It not only saves money but also saves the environment by not using a personal vehicle individually and increasing carbon emissions.

These are options which can opted by the friend by not buying a car and the opportunity cost by saving the money could be used by for other alternatives and investments.

Basically, an opportunity cost refers to the loss of value or benefit which would be incurred from engaging in some activity,

The opportunity cost of my friend trying to purchase a car is loss of money to invest in shares or stocks.

The car will depreciate over time while the shares or stocks may appreciates over time, thus, i will advice him to buy a share over a car because the city transport system is very much affordable.

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