Opportunity cost occurs because of a producer's need to:

• A. ignore the value of the next best alternative
• B. produce goods without any trade-offs
• C. maximize total production without considering alternatives
• D. allocate limited resources among competing uses

Answer: (D)

Verified step by step guidance

1. Understand the concept of opportunity cost: it refers to the value of the next best alternative that must be given up when making a choice.
2. Recognize that producers face limited resources, such as labor, capital, and raw materials, which cannot be used to produce everything simultaneously.
3. Identify that because resources are scarce, producers must decide how to allocate these resources among different possible uses or goods.
4. Realize that this allocation involves trade-offs, meaning choosing one option means forgoing another, which is the essence of opportunity cost.
5. Conclude that opportunity cost arises precisely because producers need to allocate limited resources among competing uses, making it impossible to produce all goods without trade-offs.