What is the opportunity cost of making a component part in a factory with no excess capacity?
A) Variable manufacturing cost of the component.
B) Fixed manufacturing cost of the component.
C) Cost of the production given up in order to manufacture the component.
D) Net benefit foregone from the alternative use of the capacity requireD.

Question

Quizplus · Accepted Answer

The opportunity cost of making a component part in a factory with no excess capacity is the net benefit foregone from the alternative use of the capacity required. This is because making the component part requires the use of the factory's capacity, which could have been used for producing an alternative product. The foregone net benefit from not producing the alternative product is the opportunity cost. Therefore, option D is the best choice.

What Is the Opportunity Cost of Making a Component Part