Question

which situation is the best example of opportunity cost?

a country chooses to produce bananas instead of wheat.
a country chooses to invest in manufacturing and agriculture.
a country chooses to specialize in producing paper products.
a country chooses to export all of its products.

Explanation:

Opportunity cost is the value of the next - best alternative forgone when a choice is made. In the option “A country chooses to produce bananas instead of wheat”, the country is giving up the production of wheat (the next - best alternative) to produce bananas. For the other options: investing in two areas (manufacturing and agriculture) doesn't involve forgoing one for the other; specializing in paper products doesn't clearly show a forgone alternative related to opportunity cost in the same way; and exporting all products is about trade, not about choosing between alternative productions.

Answer:

A. A country chooses to produce bananas instead of wheat.