The opportunity cost of producing a bicycle refers to the:
A)out-of-pocket payments made to produce the bicycle.
B)value of the goods that were given up to produce the bicycle.
C)bicycle's retail price.
D)marginal cost of the last bicycle produced.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the value of the next best alternative that must be given up in order to produce a good or service. Therefore, the opportunity cost of producing a bicycle is the value of the goods that were given up (such as the potential production of a car or a house) in order to produce that bicycle. The out-of-pocket payments, retail price, and marginal cost are all important factors in the production of a bicycle, but they do not represent the opportunity cost specifically.

The Opportunity Cost of Producing a Bicycle Refers to The