In microeconomics, what is the opportunity cost of choosing one option over another when resources are scarce?

• A. The value of the next-best alternative that is given up when a choice is made
• B. The additional benefit received from choosing more of the same option
• C. The amount of time spent deciding between the available options
• D. The total money price paid for the option that is chosen

Answer: (A)

Verified step by step guidance

1. Understand the concept of opportunity cost: it represents what you sacrifice when you choose one option over another, especially when resources are limited.
2. Identify that opportunity cost is not about the total money price paid or the time spent deciding, but rather about the value of the next-best alternative that you give up.
3. Recognize that the opportunity cost focuses on the benefit you miss out on by not choosing the next-best option, rather than additional benefits from the chosen option.
4. Formally, opportunity cost can be expressed as: \(\text{Opportunity Cost} = \text{Value of Next-Best Alternative Given Up}\).
5. Apply this understanding to evaluate choices by comparing the benefits of the chosen option against the benefits of the next-best alternative that is forgone.