Multiple Choice
Which term in economics best describes the limited nature of society's resources?
88
views
0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
In microeconomics, opportunity cost may be defined as the:
A
total monetary cost of producing a good, including all explicit costs only
B
difference between marginal cost and average total cost at the chosen output level
C
value of the next best alternative forgone when a choice is made
D
maximum benefit possible from an action regardless of what is sacrificed
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 a choice is made.
Recognize that opportunity cost is not limited to explicit monetary costs; it includes both explicit and implicit costs, reflecting what is sacrificed.
Eliminate options that focus only on explicit costs or specific cost differences, such as the total monetary cost or the difference between marginal and average total cost.
Identify that opportunity cost is about comparing alternatives and measuring the benefit of the foregone option, not just the maximum benefit possible without considering sacrifices.
Conclude that the correct definition of opportunity cost is the value of the next best alternative forgone when a choice is made.
Related Videos
Related Practice
