Question

The Shaffer Auto Company has purchased a large parcel of land forâ $1 million. The company recently discovered that the land is contaminated and is worthless to all possible buyers. The opportunity cost of the land is _________.
O A. equal to the cost of the factory that was planned to be built there.
O B. some amount greater than $0 but less than $1 million.
O C. $1 million.
O D $0.

Answer 1

Answer:

O D $0

Explanation:

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.

Since the land is worthless, there is no next best use of the land. Thus, its opportunity cost is zero.

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