Fast Company has just decided to outsource the production of a part for a product.Assume Fast Company leaves the area of the manufacturing plant idle where it was producing the outsourced part.It has no alternative uses of the plant.What is the opportunity cost of the idle area of the manufacturing plant to Fast Company?
A) zero
B) definitely a negative number
C) the disposal value of the entire manufacturing plant
D) none of the above

Question

Quizplus · Accepted Answer

The opportunity cost of the idle area of the manufacturing plant is zero because there are no alternative uses for it. Opportunity cost is the cost of the next best alternative foregone, and in this case, there are no other alternatives for the idle area.

Fast Company Has Just Decided to Outsource the Production of a Part