In microeconomics, what is the opportunity cost of a choice?

• A. A cost that does not change with the level of output (a fixed cost)
• B. The value of the next best alternative that must be given up when a decision is made
• C. The benefit received from the option that is chosen
• D. The total money cost of all inputs used to produce a good or service

Answer: (B)

Verified step by step guidance

1. Understand that opportunity cost refers to the value of the next best alternative that is foregone when a choice is made.
2. Recognize that it is not simply a monetary cost or a fixed cost, but rather a measure of what you give up in terms of benefits from the alternative option.
3. Identify the next best alternative to the chosen option in the decision-making scenario.
4. Evaluate the benefits or value associated with that next best alternative.
5. Conclude that the opportunity cost is exactly this value of the next best alternative that must be sacrificed to pursue the chosen option.