Opportunity cost is_________________?
Correct answer: C. that which we forgo, or give up, when we make a choice or a decision.
- A. the cost incurred in the past before we make a decision about what to do in the future.
- B. a cost that cannot be avoided. regardless of what is done in the future
- C. that which we forgo, or give up, when we make a choice or a decision.
- D. the additional benefit of buying an additional unit of a product
Explanation
Opportunity cost is the value of the next-best alternative sacrificed when a choice is made. Past or unavoidable costs do not change with the decision and therefore are not opportunity costs.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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