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.
Frequently asked questions
What is the correct answer to this question?
Considering the next best benefit given up when choosing one option
Why is this the correct answer?
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.
Which subject and chapter does this question cover?
This is a Class 11 Business Studies question. Chapter: Business, Trade and Commerce. Topic: Business Risk.
