Assessing opportunity cost involves:

• A. Comparing the value of the next best alternative forgone when making a decision
• B. Calculating the total monetary cost of all available options
• C. Choosing the option with the highest sunk cost
• D. Ignoring non-monetary factors in decision-making

Answer: (A)

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 forgone when a decision is made.
2. Recognize that opportunity cost is not about the total monetary cost of all options, but specifically about what you give up by choosing one option over another.
3. Identify that sunk costs are costs that have already been incurred and cannot be recovered, so they should not influence current decision-making.
4. Acknowledge that opportunity cost includes both monetary and non-monetary factors, as it reflects the overall value of the forgone alternative.
5. Therefore, assessing opportunity cost involves comparing the value of the next best alternative forgone when making a decision.