Question

Which of the following statements is true about the opportunity cost

(a) Accounting cost minus the marginal benefit

(b) Monetary costs and physical effort of an activity

(c) Highest value alternative forgone

(d) Accounting cost minus the marginal cost​

Answer 1

$\huge\purple{C\: Option}$

Answer 2

Option c is the correct answer.

Highest value alternative forgone is true about opportunity cost.

1. The above statement implies that when we choose one option over the other we forgo the benefit that we were to derive from the option that is given up. This is known as opportunity cost.
2. It is usually the cost of next best option that could have been chosen.
3. For e.g. - If a person spends money on an outing with friends then the opportunity cost is the time spent with friends and the money spent which could have been spent elsewhere.