ECONOMICS
COST BENEFIT ANALYSIS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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opportunity cost
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marginal cost
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variable cost
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fixed cost
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Detailed explanation-1: -“Opportunity cost is the value of the next-best alternative when a decision is made; it’s what is given up, ” explains Andrea Caceres-Santamaria, senior economic education specialist at the St.
Detailed explanation-2: -Opportunity cost (also known as “alternative cost, ”) is the difference between a project’s cost estimate and another option that must be foregone in order to implement the project. Every choice we make also means giving up another option.
Detailed explanation-3: -Opportunity cost refers to what you have to give up to buy what you want in terms of other goods or services. When economists use the word “cost, ” we usually mean opportunity cost. The word “cost” is commonly used in daily speech or in the news.
Detailed explanation-4: -The cost of the next best alternative foregone is termed as opportunity cost.
Detailed explanation-5: -There are two types of opportunity costs: explicit and implicit. Explicit Opportunity Costs are direct monetary costs that are lost when making a decision. Implicit Opportunity Costs do not consider the loss of direct monetary value when making a decision.