Multiple Choice
Why are resources for consumer consumption considered limited in economics?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which one of the following best represents an opportunity cost?
A
The resources used to produce a good or service
B
The total amount of money spent on a chosen activity
C
The value of the next best alternative forgone when making a decision
D
The profit earned from the chosen activity
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 just about money spent or resources used, but about what you sacrifice in terms of the next best option.
Compare the given options by identifying which one explicitly mentions the 'next best alternative forgone,' as this phrase captures the essence of opportunity cost.
Recall the formal definition of opportunity cost: \(\text{Opportunity Cost} = \text{Value of Next Best Alternative Forgone}\).
Conclude that the option stating 'The value of the next best alternative forgone when making a decision' best represents the concept of opportunity cost.
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