Suppose an agricultural laborer earns ? 400 per day in her village. She gets a job to work as a babysitter in a nearby town @ ? 700 per day. She chose to work as an agricultural laborer. Which one of the following is the opportunity cost of the agricultur

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Q: (CDS-I/2020)
Suppose an agricultural laborer earns ? 400 per day in her village. She gets a job to work as a babysitter in a nearby town @ ? 700 per day. She chose to work as an agricultural laborer.
Which one of the following is the opportunity cost of the agricultural laborer?

question_subject: 

Maths

question_exam: 

CDS-I

stats: 

0,7,22,5,7,4,13

keywords: 

{'agricultural laborer': [0, 0, 0, 1], 'opportunity cost': [0, 0, 0, 1], 'babysitter': [0, 0, 0, 1], 'village': [3, 1, 4, 12], 'nearby town': [0, 0, 0, 1], 'job': [0, 1, 2, 1]}

The opportunity cost refers to the loss of the next best alternative when a decision is made. In this case, the laborer had two choices: continue working as an agricultural laborer for ?400 per day or become a babysitter for ?700 per day.

Option 1: ?1,100 - This is not correct because there`s no reference to this amount in the question.

Option 2: ?700 - This is the income she would earn if she decided to be a babysitter, but it is not the opportunity cost.

Option 3: ?400 - This is her current income and not the cost of the lost opportunity.

Option 4: ?300 - This is the correct answer. The opportunity cost of continuing her job as an agricultural laborer is the difference between what she could earn as a babysitter (?700) and what she currently earns as an agricultural laborer (?400), which is ?300. This is the income she loses out on by not taking the babysitting job.