Multiple Choice
When a resource, such as space in the factory, has no alternative use, its opportunity cost is:
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0. Basic Principles of Economics
Scarcity and Choice
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Which of the following best describes the factors that determine the opportunity cost of a decision?
A
The value of the next best alternative forgone when making a choice
B
The number of alternatives considered before making a decision
C
The total monetary cost of all available alternatives
D
The amount of resources used in producing the chosen good or service
Verified step by step guidance1
Understand the concept of opportunity cost: it refers to the value of the next best alternative that must be given up when making a decision.
Recognize that opportunity cost is not about the total number of alternatives or the total monetary cost of all options, but specifically about the value of the single best alternative that is forgone.
Identify that opportunity cost focuses on the trade-off involved in choosing one option over another, emphasizing the value of what you sacrifice.
Recall the formal definition: Opportunity Cost = Value of Next Best Alternative Forgone.
Conclude that the best description among the options is the one that highlights the value of the next best alternative forgone when making a choice.
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