What knowledge about opportunity costs is important to understand?
A) how to calculate the total revenue generated by a firm
B) how to assess the economic profitability of a firm
C) how accountants calculate accounting profits
D) the tax liability of a firm

Question

Quizplus · Accepted Answer

Understanding opportunity costs is important in assessing the economic profitability of a firm, as it involves considering the cost of the next best alternative forgone in making a decision. Knowledge of opportunity costs does not directly relate to calculating total revenue generated by a firm, how accountants calculate accounting profits, or a firm's tax liability.

What Knowledge About Opportunity Costs Is Important to Understand