Question

Select the answer that best describes what an opportunity cost is?

Answer 1

A benefit, profit, or value of something that must be given up to acquire or achieve something else. Since every resource (land, money, time, etc.) can be put to alternative uses, every action, choice, or decision has an associated opportunity cost.

Answer 2

Answer:

B. The trade-off of making one choice and giving up a different choice.

Explanation:

Opportunity cost is the worth of the option forgone. It is also called the alternative forgone or real cost. It is a concept that arises as a result of the unlimited wants that cannot be satisfied with the limited resources available.

For example, a man who has $1 million dollars can but a home for $900,000 which makes it impossible for him to buy a car of $500,000 because he has just $1 million. The cost of the car that was not purchased is the opportunity cost in this.

Hence the right option is B. The trade-off of making one choice and giving up a different choice.