The concept of opportunity cost:
A)is irrelevant in command economies because of central planning
B)suggests that resources are often unlimited in quantity
C)is irrelevant if the production possibilities curve is shifting to the right
D)suggests that inexhaustible wants can be fulfilled
E)suggests that the use of resources in any particular line of production means that alternative outputs must be forgone

Question

Quizplus · Accepted Answer

The concept of opportunity cost suggests that when resources are used in any particular line of production, alternative outputs must be forgone. This means that there are limited resources and unlimited wants, and choices must be made about how to allocate those resources. The other options are incorrect: A is incorrect because command economies still face scarcity and therefore opportunity cost; B is incorrect because resources are scarce; C is incorrect because opportunity cost is always relevant regardless of the position of the production possibilities curve; and D is incorrect because wants are indeed inexhaustible.

The Concept of Opportunity Cost