The Liu Company is trying to decide whether to accept a special order of 1,000 items from a new customer. It has limited capacity. If it accepts this order, it will not be able to produce 200 units for one of its existing customers. The loss of revenue from the 200 units is best described as which of the following?

Question

Quizplus · Accepted Answer

The loss of revenue from not being able to produce 200 units for an existing customer is an opportunity cost, as it represents the potential revenue that could have been earned if the company had not accepted the new customer's special order.

The Liu Company Is Trying to Decide Whether to Accept