The opportunity cost of constructing a new public highway is the
A) money cost of hiring contractors and construction workers for the new highway.
B) value of other goods and services that are sacrificed in order to construct the new highway.
C) expected cost of constructing the new highway in a future year.
D) value of shorter driving times and distances when the new highway is completed.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the value of the next-best alternative that is sacrificed in order to undertake a particular activity or investment. In the case of constructing a new highway, the opportunity cost is the value of other goods and services that could have been produced or consumed with the resources that are used to build the highway. Thus, option B is the correct answer. The money cost of hiring contractors and construction workers (option A) is just one component of the opportunity cost, but it does not capture the full picture. Option C refers to the expected cost of constructing the new highway in a future year, which is not relevant to the concept of opportunity cost. Option D refers to the expected benefits of the new highway, but opportunity cost focuses on the foregone opportunities, not the gains.

The Opportunity Cost of Constructing a New Public Highway Is