The opportunity cost of a decision is measured in terms of
A) time.
B) the price of the alternative we choose.
C) the next best thing given up.
D) the price of a new opportunity that arises.
E) sunk cost.

Question

Quizplus · Accepted Answer

Opportunity cost is the benefit we give up or the next best option we forgo when we choose one option over another. Option C states that opportunity cost is the next best thing given up, which is the correct definition. Options A and D may be factors that influence the opportunity cost, but they do not define it. Option B refers only to the price of the alternative we choose, not the cost of the option we do not choose. Sunk cost (option E) is a cost that has already been incurred and cannot be recovered; it does not relate to opportunity cost.

The Opportunity Cost of a Decision Is Measured in Terms