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In this case, the correct economic term for Katie's thought process of considering the alternatives that will be lost if she decides to spend her savings on buying a car is B. opportunity cost.
Here's why:
1. Opportunity cost refers to the value of the next best alternative forgone when a decision is made. In Katie's situation, if she chooses to buy a car, the opportunity cost would be the value of what she could have done with the savings if she didn't spend it on the car, like investing in something else, going on a vacation, or saving for the future.
2. By considering the opportunity cost, Katie is evaluating the benefits and drawbacks of her decision to purchase a car in comparison to what she could have gained by choosing another option.
Therefore, in economics, when individuals like Katie weigh the trade-offs between different choices, they are thinking about the opportunity cost associated with each decision.
