The money cost of a good will approximate the opportunity cost if
A) there are serious distortions in the market.
B) the market functions well.
C) there is much specialization in the market.
D) nations are exploiting the law of comparative advantage.

Question

Quizplus · Accepted Answer

When the market functions well, the price of a good will be determined by the forces of supply and demand, reflecting the opportunity cost of producing that good. In a well-functioning market, there will be little distortion from external factors, allowing the price to accurately reflect the true opportunity cost. Therefore, the money cost of a good will approximate the opportunity cost in a well-functioning market.

The Money Cost of a Good Will Approximate the Opportunity