The opportunity cost of an activity is best measured
A)only by the monetary costs
B)by the number of alternative activities that were forgone
C)by the cost difference between the chosen activity and the next best alternative
D)by the value expected from the best alternative that is forgone
E)as the time wasted choosing among various activities

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the best alternative forgone when making a decision. It is not just the monetary costs, but also the value expected from the best alternative that is forgone. Choice D correctly identifies this as the best way to measure opportunity cost.

The Opportunity Cost of an Activity Is Best Measured