The revenue that is forgone from an alternative use of an asset is called a(n):
A) opportunity cost.
B) differential revenue.
C) sunk cost.
D) differential income.

Question

Quizplus · Accepted Answer

The revenue forgone from an alternative use of an asset is known as opportunity cost. This cost is the benefit or value of the next best option that must be forgone to pursue a certain action or investment. Therefore, option A is the correct answer.

Option B, differential revenue, refers to the difference between two alternatives in terms of revenue generated.

Option C, sunk cost, refers to a cost that has already been incurred and cannot be recovered.

Option D, differential income, refers to the difference between two alternatives in terms of income generated.

The Revenue That Is Forgone from an Alternative Use of an Asset