Question

an opportunity cost:
multiple choice

• is an unavoidable cost because it remains the same regardless of the alternative chosen.
• requires a future outlay of cash.
• results from past managerial decisions.
• is the potential benefit lost by taking a specific action instead of alternative actions.
• is irrelevant in decision making because it occurred in the past.

Explanation:

To determine the correct option for the definition of opportunity cost, we analyze each choice:

• The first option is incorrect because opportunity cost varies with the alternative chosen (it's about the foregone benefit of the next - best alternative).
• The second option is wrong as opportunity cost is not a cash outlay but a foregone benefit.
• The third option is incorrect since opportunity cost is about future - foregone benefits, not past decisions.
• The fourth option accurately defines opportunity cost: it is the potential benefit that is lost when one takes a specific action instead of pursuing alternative actions.
• The fifth option is incorrect because opportunity cost is highly relevant in decision - making as it helps in evaluating the trade - offs of different choices.

Answer:

D. Is the potential benefit lost by taking a specific action instead of alternative actions.