Opportunity Cost of Money Spent

Steps:

• Identify the decision: Student spends $5 on a present instead of alternatives.
• Define opportunity cost: Value of the next best use of resources forgone.
• Apply to money: The $5 could buy other goods, not just its nominal value.
• Conclude: Cost is alternatives, not the amount or time alone.

Why B is correct:

• Opportunity cost is the forgone alternatives from using scarce resources, per economic definition; here, $5 buys other goods instead of the present.

Why the others are wrong:

• A: Ignores that opportunity cost measures alternatives, not just monetary outlay.
• C: Free party entry doesn't negate the cost of the $5 present.
• D: Idle time may have low cost, but $5 withdrawal still forgoes other purchases.

Final answer: B