An opportunity cost:

Question

Quizplus · Accepted Answer

An opportunity cost is the potential benefit that is lost when one alternative is chosen over another. It is important in decision making because it helps to weigh the benefits and drawbacks of different options. A is incorrect because a current outlay of cash is a cash outflow, not an opportunity cost. B is incorrect because although past managerial decisions can have an impact on opportunity costs, they do not define them. C is incorrect because opportunity costs are relevant to decision making. D is incorrect because opportunity costs vary based on the alternative chosen.

An Opportunity Cost