Question

multiple choice 2 points
what is an opportunity cost?
a) the total amount of money spent
b) the benefit of the next best alternative when a decision is made
c) the amount of money saved
d) the amount of money earned
answer: b) the benefit of the next best alternative when a decision is made
a
b
c
d

Explanation:

Opportunity cost is a fundamental concept in economics. It refers to the value of the next best alternative that is forgone when a decision is made. For example, if a person chooses to invest in a stock, the opportunity cost could be the interest they would have earned from a savings account. Option A refers to total money spent, which is just a cost, not an opportunity cost. Option C is about money saved, which is not related to the concept of forgoing an alternative. Option D is about money earned, which also does not capture the essence of opportunity cost. Option B correctly defines opportunity cost as the benefit of the next best alternative when a decision is made.

Answer:

B. The benefit of the next best alternative when a decision is made