The opportunity cost of an item is:
A)greater during periods of inflation and lower during periods of deflation.
B)the highest valued alternative you give up to get that item.
C)the value of all available alternatives you sacrifice to get that item.
D)always equal to the dollar value of the item.
E)lower during periods of inflation and higher during periods of deflation.

Question

Quizplus · Accepted Answer

Opportunity cost is the highest valued alternative you give up to get an item. It is not dependent on inflation or deflation, nor is it always equal to the dollar value of the item. Option C is incorrect because it includes all available alternatives, not just the highest valued one. Option E is also incorrect because inflation or deflation do not determine the opportunity cost of an item.

The Opportunity Cost of an Item Is