When GD Inc.declared a dividend of $20,000,000,its market value increased from $8 billion to $8.5 billion.However,it lost a chance to reinvest $20,000,000 in the research and development of a new product which would have earned a profit of $200 million.Thus,this $200 million is referred to as GD Inc.'s
A) producer surplus.
B) consumer surplus.
C) opportunity cost.
D) social cost.

Question

Quizplus · Accepted Answer

GD Inc.'s opportunity cost is $200 million. Opportunity costs capture the value of the best forgone alternative use of the resources employed.