Question:
Which of the following correctly explains “opportunity cost”?
Which of the following correctly explains “opportunity cost”?
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Every choice has a sacrifice attached to it — that sacrifice is opportunity cost.
Updated On: May 25, 2026
- Monetary cost of production
- Cost incurred on raw materials
- Value of next best alternative foregone
- Cost of fixed capital
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The Correct Option is C
Solution and Explanation
Concept:
Opportunity cost arises because resources are scarce and have alternative uses.
Step 1: Understanding opportunity cost.
When one choice is made, another alternative is sacrificed.
Step 2: Definition.
Opportunity cost is: \[ \text{Value of next best alternative foregone} \]
Step 3: Example.
Suppose a student spends time preparing for Economics instead of Mathematics. The marks that could have been scored in Mathematics represent opportunity cost.
Step 4: Evaluating options.
(A) Refers to accounting cost.
(B) Specific production expense only.
(C) Correct definition.
(D) Refers to capital expenditure.
Step 5: Final conclusion.
Hence: \[ \boxed{\text{(C) Value of next best alternative foregone}} \]
Step 1: Understanding opportunity cost.
When one choice is made, another alternative is sacrificed.
Step 2: Definition.
Opportunity cost is: \[ \text{Value of next best alternative foregone} \]
Step 3: Example.
Suppose a student spends time preparing for Economics instead of Mathematics. The marks that could have been scored in Mathematics represent opportunity cost.
Step 4: Evaluating options.
(A) Refers to accounting cost.
(B) Specific production expense only.
(C) Correct definition.
(D) Refers to capital expenditure.
Step 5: Final conclusion.
Hence: \[ \boxed{\text{(C) Value of next best alternative foregone}} \]
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