The real cost of any input is determined by the best alternative use of that input.

Name: The real cost of any input is determined by the best alternative use of that input.
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Question

Quizplus · Accepted Answer

This is a fundamental principle of economics known as opportunity cost. The opportunity cost is the benefit foregone from choosing one alternative over the next best alternative. Therefore, the real cost of any input is the value of the next best alternative use of that input.

The Real Cost of Any Input Is Determined by the Best