The opportunity cost of making a component part in a factory with no excess capacity is the: (CMA adapted)
A) variable manufacturing cost of the component.
B) fixed manufacturing cost of the component.
C) total manufacturing cost of the component.
D) net benefit foregone from the best alternative use of the capacity required.

Question

Quizplus · Accepted Answer

The opportunity cost is the net benefit foregone from the best alternative use of the capacity, as the factory has no excess capacity.

The Opportunity Cost of Making a Component Part in a Factory