The opportunity cost of making a component part in a factory with no excess capacity is the
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 for making a component part in a factory with no excess capacity is the net benefit foregone from the best alternative use of the capacity required. This means that the factory has limited resources and producing one component part means that it cannot use those resources for any other purpose. Therefore, the best choice is D.

The Opportunity Cost of Making a Component Part in a Factory