Question

Opportunity cost is _________.

• A. the additional benefit of buying an additional unit of a product
• B. the cost which we forego, or give up, when we make a choice or a decision
• C. a cost that cannot be avoided, regardless of what is done in the future
• D. the cost incurred in the past before we make a decision about what to do in the future

Answer 1

Answer: (B)

the cost which we forego, or give up, when we make a choice or a decision

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.