The seller of a product has no idle capacity and can sell all it can produce at $39 per unit.Outlay cost is $9.What is the opportunity cost,assuming the seller sells internally?
A) $9
B) $30
C) $39
D) $48

Question

Quizplus · Accepted Answer

The opportunity cost is the value of the best alternative forgone. In this case, the best alternative forgone is the price at which the seller could sell the product in the external market. Since the seller can sell all it can produce at $39 per unit, the opportunity cost is $39 per unit. Therefore, the seller should sell externally, as it provides a higher opportunity cost ($39) than selling internally ($30).

The Seller of a Product Has No Idle Capacity and Can