An opportunity cost is
A) the dollar amount that is paid.
B) anything the decision maker believes costs to be.
C) the benefits of the highest-valued alternative forgone.
D) whatever is paid out and cannot be reduced or reversed.
E) another term for all the sunk costs.

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the best alternative that must be given up in order to pursue a certain action. It is not necessarily a dollar amount or a belief about costs, and it is not limited to sunk costs or payments that cannot be reduced or reversed. Choice C correctly defines opportunity cost as the benefits of the highest-valued alternative forgone.

An Opportunity Cost Is