Which statement is true of an opportunity cost?
A)It is the cost of a special order option.
B)It reduces the possibility of accepting a particular course of action.
C)It is the potential benefit as a result of following an alternative course of action.
D)It is a variable cost.

Question

Quizplus · Accepted Answer

Opportunity cost is the cost of the next best alternative forgone, which means the potential benefit that could have been obtained if another course of action was pursued. Therefore, option C is the correct statement as it defines opportunity cost accurately. Option A is incorrect as it refers to a specific cost and not an opportunity cost. Option B is incorrect as opportunity cost does not reduce the possibility of accepting a particular course of action, but rather helps weigh the benefits and drawbacks of various options. Option D is incorrect as opportunity cost is not a variable cost but a theoretical concept.

Which Statement Is True of an Opportunity Cost