When deciding whether to spend money on a new car or save for a vacation, what does opportunity cost represent in this scenario?

Opportunity cost is the value of what you give up when you make a choice. In this case, if you decide to spend money on a new car, the opportunity cost is the vacation you won't be able to take because you spent that money. This means you need to think about how much you value having a new car compared to going on a fun trip. For example, if the car costs $20,000, and the vacation you wanted costs $3,000, the opportunity cost of the car is the enjoyment and experiences you miss out on during that vacation. So, understanding opportunity cost helps you make better decisions about how to spend your money based on what matters most to you.