Multiple Choice
Fundamentally, economics deals with which of the following concepts?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
Which of the following best describes the opportunity cost of an action?
A
The total monetary cost incurred in undertaking the action.
B
The sum of all possible alternatives available.
C
The benefit received from the chosen action.
D
The value of the next best alternative that is forgone when a choice is made.
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 choice.
Recognize that opportunity cost is not simply the total monetary cost or all possible alternatives, but specifically the value of the single best alternative that is forgone.
Note that opportunity cost is about what you sacrifice in terms of benefits from the next best option, not the benefit received from the chosen action itself.
Compare each option given in the problem to the definition of opportunity cost to identify which one matches the concept accurately.
Conclude that the correct description of opportunity cost is 'The value of the next best alternative that is forgone when a choice is made.'
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