The potential benefits lost by taking a specific action when two or more alternative choices are available is known as a(n):
A)Alternative cost.
B)Sunk cost.
C)Out-of-pocket cost.
D)Differential cost.
E)Opportunity cost.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the potential benefits that are lost by taking a specific action when two or more alternative choices are available. It is the cost of forgoing the next best alternative. Therefore, the best choice(s) in a given situation should be based on the opportunity cost analysis rather than just the monetary or out-of-pocket cost.

The Potential Benefits Lost by Taking a Specific Action When