Question

Which phrase best defines the term “opportunity cost”?

A. what a country produces when it specializes in a good or service
B. what a country gives up when it chooses to produce a good or service
C. what a country gains when it chooses to produce a good or service
D. what a country invests in a particular good or service

Answer 1

Opportunity cost is the cost of the next best alternative foregone in a decision. In terms of production and trade, it refers to what a country gives up when it chooses to produce a certain good or service instead of another.

Opportunity cost is defined as the cost of the next best alternative that is given up in order to obtain something else.

It is the value of what is forgone in a decision.

In the context of production and trade, opportunity cost refers to what a country gives up when it chooses to produce a certain good or service instead of another.

For example, if a country specializes in producing cars, it gives up the opportunity to produce other goods, such as computers or clothing.