The opportunity cost of making a component part in a factory with excess capacity for which there is no alternative use is
A)the total manufacturing cost of the component.
B)the total variable cost of the component.
C)the fixed manufacturing cost of the component.
D)zero.

Question

Quizplus · Accepted Answer

The opportunity cost in this scenario is zero since there is no alternative use for the excess capacity in the factory. Therefore, the cost of making the component is not sacrificing the potential revenue from another use of the factory's resources.

The Opportunity Cost of Making a Component Part in a Factory