Consultant Frank Alvarez recently commented that the most common error made by his clients is ignoring opportunity costs associated with business decisions. The costs Alvarez was referring to are:
A) Benefits foregone by selecting one course of action over another.
B) The out-of-pocket costs of implementing a particular business decision.
C) Costs that make future opportunities possible.
D) Costs that have made past opportunities possible.

Question

Quizplus · Accepted Answer

Opportunity costs refer to the benefits that would have been gained if an alternative decision had been made. This means that the opportunity costs are the benefits foregone by selecting one course of action over another. Option B refers to the explicit costs that are incurred in implementing a particular decision, while options C and D refer to costs that are related to making future or past opportunities possible, which is not directly related to opportunity costs.

Consultant Frank Alvarez Recently Commented That the Most Common Error