Question

Which situation best describes an opportunity cost? A. A corporation that begins selling a new product sees its overall profit increase. B. A person decides to go back to college in order to transition into a new career C. A marketing company goes out of business because it could not find enough clients D. An employer who hires a new employee can’t hire the other people she interviewed

Answer 1

Answer:

The correct answer is D. An employer who hires a new employee can’t hire the other people she interviewed.

Explanation:

Opportunity costs are the costs of an economic choice expressed in terms of the best missed opportunity: it values the unrealized return of the best possible alternative compared to the final decision made (Choosing is losing). The profit that is obtained from these costs is the economic profit.

The opportunity costs are therefore broader than the accounting costs. The accounting costs only provide a monetary (expressed in money) valuation of the amount spent to acquire or do something. The opportunity costs also examine what a possible alternative use of resources could have yielded.