An opportunity cost:
A) Is an unavoidable cost.
B) Requires a current outlay of cash.
C) Results from past managerial decisions.
D) Is the lost benefit of choosing an alternative course of action.
E) Is irrelevant in decision making.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the lost benefit of choosing an alternative course of action. It is a relevant factor in decision making as it helps in analyzing the trade-offs between different choices. Option A is incorrect as most costs are avoidable if alternative choices are made. Option B is incorrect as cash outlay is not the only factor considered in opportunity cost. Option C is incorrect as it does not necessarily result from past managerial decisions. Option E is incorrect as opportunity cost is a crucial factor in decision making.

An Opportunity Cost