ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The best alternative forgone
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The cost of the item selected
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The cost of exploring business opportunities
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The labor used in producing the product
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Detailed explanation-1: -Opportunity cost is the value of the next best alternative forgone as a result of making a decision. Opportunity cost is a function of scarcity. Because of scarcity, people are faced with trade-offs in how they use their limited resources.
Detailed explanation-2: -Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount spent on that choice. The concepts of scarcity, choice, and opportunity cost are at the heart of economics. A good is scarce if the choice of one alternative requires that another be given up.
Detailed explanation-3: -Opportunity cost is the value of the best alternative forgone in making any choice.
Detailed explanation-4: -Key Takeaways Opportunity cost is the forgone benefit that would have been derived from an option not chosen. To properly evaluate opportunity costs, the costs and benefits of every option available must be considered and weighed against the others.
Detailed explanation-5: -“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. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities.