Opportunity cost is best defined as
A)the amount given up when choosing one activity over all other alternatives.
B)the amount given up when choosing one activity over the next best alternative.
C)the opportunity to earn a profit that is greater than the one currently being made.
D)the amount that is given up when choosing an activity that is not as good as the next best alternative.

Question

Quizplus · Accepted Answer

Opportunity cost is the value of the next best alternative that must be foregone in order to pursue a certain action. Therefore, option B is the correct definition of opportunity cost. Option A is similar but not precise, as opportunity cost refers to the specific alternative that is foregone, not all alternatives. Option C is unrelated, and option D is incorrect, as opportunity cost is only concerned with the value of the next best alternative.

Opportunity Cost Is Best Defined as