Final answer:
The greatest opportunity cost is the profit of $50 from the declined first order since it is the next best alternative not chosen. Maximizing profit by selecting the higher-paying order is standard practice in a competitive market, where firms aim to produce the quantity where total revenue minus total cost is maximized.
So, the correct answer is B.
Step-by-step explanation:
The manufacturer's decision to fulfill the second order with a profit of $150 over the first order with a profit of $50 is not necessarily the greatest opportunity cost. Opportunity cost refers to the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. In this case, the opportunity cost is the foregone profit of $50 from the first order. The decision to maximize profit by choosing the higher-paying order does not mean the opportunity cost is the greatest, because it simply reflects the next best alternative that was not chosen (in this case, the profit of $50).
It's important for businesses to calculate the quantity of output that will provide the highest level of profit by comparing total revenue to total cost. A perfectly competitive firm, such as a small farm producing raspberries, would sell its goods at the market price and aim to produce the quantity that maximizes this difference. In the example of the farmer selling raspberries, maximum profit occurs at the output level where the difference between total revenue and total cost is greatest.
So, the correct answer is B.