In the context of resource allocation, which of the following best describes the term 'opportunity cost'?
Practice Questions
1 question
Q1
In the context of resource allocation, which of the following best describes the term 'opportunity cost'?
The cost of the next best alternative foregone when a decision is made.
The total cost incurred in the production of goods.
The financial cost associated with a resource.
The cost of resources that are not utilized.
Opportunity cost refers to the value of the next best alternative that is given up when a choice is made, making option 0 the correct answer.
Questions & Step-by-step Solutions
1 item
Q
Q: In the context of resource allocation, which of the following best describes the term 'opportunity cost'?
Solution: Opportunity cost refers to the value of the next best alternative that is given up when a choice is made, making option 0 the correct answer.
Steps: 4
Step 1: Understand that when you make a choice, you have to give up something else.
Step 2: Identify what you are giving up when you make that choice.
Step 3: Recognize that the value of what you gave up is called 'opportunity cost'.
Step 4: Realize that opportunity cost is specifically about the next best alternative you could have chosen.
