Multiple Choice
Which of the following best illustrates an opportunity cost under scarcity?
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0. Basic Principles of Economics
Scarcity and Choice
Multiple Choice
In the context of scarcity and choice, what is opportunity cost?
A
The extra benefit gained from consuming one additional unit of a good or service
B
The total money spent on a good or service, including taxes and fees
C
The value of the next-best alternative that must be given up when a choice is made
D
The difference between what a consumer is willing to pay and what they actually pay
Verified step by step guidance1
Understand that scarcity means resources are limited, so choosing one option means giving up others.
Recognize that opportunity cost is the value of the next-best alternative that you forgo when making a choice.
Note that opportunity cost is not about the extra benefit from consuming more (which relates to marginal benefit), nor is it the total money spent or the difference between willingness to pay and actual payment.
Focus on the idea that opportunity cost measures what you sacrifice in terms of the best alternative use of your resources.
Summarize that opportunity cost helps explain why every choice has a trade-off, emphasizing the importance of considering what you give up when making decisions.
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