The term “opportunity cost” is best defined as: the benefit associated with a

Question:

The term “opportunity cost” is best defined as: the benefit associated with a rejected alternative when making a choice. an irrelevant decision factor. the amount of money paid for an item. the amount of money paid for an item, taking possible discounts into account. the amount of money paid for an item, taking inflation into account.

Answer:

The term “opportunity cost” is best defined as:

the benefit associated with a rejected alternative when making a choice

Sometimes, it happens that we have to forego one option while selecting one alternative. For example, The factory used in manufacturing a product can be rented out. So, if one decides to use the factory for manufacturing purposes, then he will not be able to let out the factory on rent so here the rent was forgone is the opportunity cost. One has to make an analysis to see whether the product manufactured will generate more income or rent revenue will be higher to take a decision between the two options.

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