A fast-food chain makes the decision to rebrand itself as a mid-range adult café instead of a cheap kid-friendly restaurant. This change will involve using higher-quality ingredients and renovating to remove children’s playgrounds.

Question

Question
Use the passage to answer the question.
What is the opportunity cost in the scenario above?
(1 point)
Responses

one-time expense of renovating restaurants
one-time expense of renovating restaurants

ongoing expense of high-quality ingredients
ongoing expense of high-quality ingredients

money that is expected to be provided by new adult customers
money that is expected to be provided by new adult customers

money that could have been made from families with young children

Answer 1

The opportunity cost in the scenario above is:

money that could have been made from families with young children.

This is because the fast-food chain is forgoing potential revenue from a demographic (families with young children) that it would have attracted as a cheap kid-friendly restaurant in favor of targeting a different market (mid-range adults).