Which of the following would be categorised as an opportunity cost?
a.not being able to spend your $10 000 savings if you sink the money into your business
b.the cost of purchasing supplies for your house-cleaning business
c.the cost of purchasing auto insurance for your dry-cleaning delivery business
A)a only
B)a and c only
C)b and c only
D)all of the above

Question

Which of the following would be categorised as an opportunity cost? 
a.not being able to spend your $10 000 savings if you sink the money into your business
b.the cost of purchasing supplies for your house-cleaning business
c.the cost of purchasing auto insurance for your dry-cleaning delivery business
A)a only
B)a and c only
C)b and c only
D)all of the above

Quizplus · Accepted Answer

Opportunity cost refers to the cost of the next best alternative that is foregone when making a decision. In this case, not being able to spend the $10,000 savings is the opportunity cost of sinking the money into the business. The cost of purchasing supplies and auto insurance are regular business expenses and not opportunity costs.

Which of the Following Would Be Categorised as an Opportunity