What does the opportunity cost of an action include?
A) the highest valued alternative use of the time spent on the action
B) the total benefits received as a result of the action
C) the lowest valued alternative use of the time spent on the action
D) the net benefits received as a result of the action

Question

Quizplus · Accepted Answer

The opportunity cost of an action includes the value of the next best alternative foregone, which is the highest valued alternative use of the time spent on the action. Therefore, choice A is the best choice as it correctly identifies the opportunity cost. The other choices are incorrect as they include either total benefits (B) or net benefits (D), which are not necessarily the same as opportunity cost, or the lowest valued alternative use (C), which is not the same as the highest valued alternative foregone.

What Does the Opportunity Cost of an Action Include