Question

Opportunity cost is _____.

Answer 1

A)the value of the alterative the person did not select

Answer 2

The correct answer is A. The value of the alternative the person did not select

Explanation:

Every time we make a decision or choose a product/service, we choose one while rejecting other alternatives. For example, by selecting to practice yoga you reject other physical activities such as running; or by buying food in a Chinese restaurant you loss other alternatives such as Italian food. This value you lose in the process is known as opportunity cost.

In the economy, the opportunity cost is defined as the benefit or value, the consumer or investor losses. This is important because by analyzing consumer's decisions and the value of the alternative they lose, a business can take decisions to guarantee the fidelity of customers. According to this, the opportunity cost can be defined as "The value of the alternative the person did not select".