Susan has $$40$

$

$$

$40$

in spending money each week, which she can allocate between coffee and tea. The price of coffee is $$4$

$

$$

$4$

per cup, and the price of tea is $$2$

$

$$

$2$

per cup.

Based on this information, which statement correctly describes the opportunity cost? Select the best answer.

Answer

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There is no opportunity cost involved because Susan can afford both goods with her budget.

The opportunity cost of a cup of coffee is $2$

$2$

cups of tea, and the opportunity cost of a cup of tea is $0\mathrm{.}5$

$0\mathrm{.}5$

cups of coffee.

There is no opportunity cost because both items are part of her opportunity set.

The opportunity cost of a cup of coffee is $0\mathrm{.}5$

$0\mathrm{.}5$

cups of tea, and the opportunity cost of a cup of tea is $2$

$2$

cups of coffee.