The opportunity cost of producing one additional truck is
A)the profit that could have been earned from selling that truck.
B)the amount of other goods that could not be produced because productive resources were used instead to produce that truck.
C)the price of the truck.
D)all of the choices are true.

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the next best alternative foregone. Therefore, in order to produce one additional truck, resources must be diverted from other goods that could have been produced. This implies that the opportunity cost of producing the truck is the amount of other goods that could not be produced because productive resources were used instead to produce the truck. Option A (the profit that could have been earned from selling that truck) is not the opportunity cost, but rather the revenue that could be earned from selling the truck. Option C (the price of the truck) is not the opportunity cost either, but rather the price at which the truck could be sold. Option D is incorrect as well, since option A and C are not true.

The Opportunity Cost of Producing One Additional Truck Is