A(n)____ is the return on the best alternative use of an asset,the highest return that will not be earned if funds are not invested in a particular project.
A) opportunity cost
B) sunk cost
C) incremental cash flow
D) externality

Question

Quizplus · Accepted Answer

Opportunity cost refers to the benefit that could have been gained from an alternative use of resources. In the context of investment decisions, it is the return that could have been earned by investing in the next best alternative. This concept is important for businesses to make rational investment decisions and allocate resources efficiently. Therefore, option A is the best choice because it defines opportunity cost accurately. The other options are not relevant to the definition of opportunity cost.

A(n)____ Is the Return on the Best Alternative Use of an Asset,the