Opportunity cost is _____.

Identify the opportunity cost in each of the following examples. Select the answer that best completes the sentence.

A. the value of the alternative a person did not select

B. the fact that one must spend money in order to get what they want

C. the value of one thing is always greater than the value of another

D. no answer is correct.

2 Answer

  • I think that the answer is either A or D
  • The correct statement will be that the opportunity cost is the value of the alternative a person did not select. So, the correct option that matches the statement is A.

    Opportunity cost is calculated in cases where there are one or more alternatives in the hands of a person where such money of that person could have been deployed instead.

    Opportunity Cost

    • Opportunity cost is the value of money and its returns foregone by a person by deploying the available resources at a different place to achieve returns or satisfaction, as the case may be.

    • The opportunity cost can be calculated as surplus or deficit by comparing the alternative sources and their returns with the deployed source and returns gained, if any.

    • For example, a person can either buy a house or rent a house. To buy the house, the person will have to pay in lump sum when such money could have been deployed elsewhere to get better returns.

    Hence, the correct option is A that the Opportunity Cost is the value of an alternative a person did not select.

    Learn more about opportunity cost here: