Question

Opportunity cost means _______________.

• A. the next best alternative sacrificed in order to obtain that commodity
• B. cost related to an optimum level of production
• C. variable costs
• D. a bargain price for a factor of production

Answer 1

The correct option is A the next best alternative sacrificed in order to obtain that commodity

Opportunity cost refers to the sacrifice made in terms of the units of other commodity in order to obtain certain units of a commodity.
For e.g.: Individual X sacrifices 5 units of commodity A to buy 2 units of commodity B. Here, the sacrifice made of 5 units of commodity A is the opportunity cost.