Madeline spends all of her spare money on widgets, which cost $2 each, and gizmos, which cost $3 each. What is her opportunity cost if Madeline buys 12 widgets?

The correct answer to the following question is that the opportunity cost of Madeline would be 8 units of gizmos.

Explanation:

Opportunity cost can be defined as the benefit or gain that a person might have got or earn if he or she had not selected the current alternative. In this question Madeline has bought 12 widgets, now these widgets cost $2 each, so she has spend $24 ($2 x 12) on the widgets. So here her opportunity cost would be the gizmos that she could have bought, that is $24 / $3 = 8 units