ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The ‘next best’ alternative is not stressed.
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The type of economic system is not identified.
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There is no mention of money values.
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There is no reference to finite resources and unlimited wants.
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Detailed explanation-1: -The statement is TRUE. The significance of the better opportunity foregone in a specific choice is referred to as opportunity cost. It’s not just the money spent on that option. Limited availability, preference, and opportunity cost are central concepts in economic analysis.
Detailed explanation-2: -Opportunity cost is a term in economics used to describe benefits that are lost when choosing one option over another. In short, it’s a value of the road not taken. Opportunity costs are easy to overlook, but understanding missed opportunities is crucial to better decision making in business.
Detailed explanation-3: -Opportunity cost is defined as the cost of the next best alternative foregone. It represents the sacrifices that people must make due to the scarcity of resources. Resources are limited but wants are unlimited, thus choices must be made.
Detailed explanation-4: -Opportunity costs represent the potential benefits that an individual, investor, or business misses out on when choosing one alternative over another.