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Which decision shows understanding of opportunity cost?

Answer and explanation

Correct answer: Considering the next best benefit given up when choosing one option

Opportunity cost is the value of the next best alternative that is given up when a choice is made. Because money, time, labour, and other resources are limited, an entrepreneur compares what each option can provide and what must be sacrificed. Choosing the most expensive option or ignoring cost is not opportunity-cost analysis. Thus A gives the correct meaning.

Related tags

Opportunity-CostDecision-MakingBusiness RiskBusinessTrade And CommerceBusiness Trade And CommerceBusiness StudiesClass 11 Mcq

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