Question: Which of the following best describes the term \'opportunity cost\'?

Options:

1. The cost of the next best alternative foregone
2. The total cost of production
3. The fixed costs incurred regardless of production
4. The variable costs associated with production

Correct Answer: The cost of the next best alternative foregone

Solution:

Opportunity cost refers to the cost of the next best alternative that is foregone when a decision is made.