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Question

Which of the following statements about opportunity cost is TRUE?

I. Opportunity cost is equal to implicit costs plus explicit costs.
II. Opportunity cost only measures direct monetary costs.
III. Opportunity cost accounts for alternative uses of resources such as time and money.


  1.  I

  2. I, II and III.

  3. III only.

  4. I and III only.


Solution

The correct option is D

I and III only.


Opportunity cost is equal to implicit costs plus explicit costs. Opportunity cost accounts for alternative uses of resources such as time and money.

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