Question

The opportunity cost of an action is the:

a. Net benefit of all alternative actions
b. Net profit derived from the next best alternative action
c. Accounting cost of the next best alternative action
d. Net benefit of the next best alternative action

Answer 1

The opportunity cost of an action is the net benefit of the next best alternative that is not chosen.

Step-by-step explanation:

The opportunity cost of an action is the value of the next best alternative that is foregone when making a decision. It represents the benefits you could have received by taking an alternative action. Therefore, the correct answer to the provided question is 'd. Net benefit of the next best alternative action.' For instance, if you spend time playing video games, the opportunity cost is the studying or work you could have completed instead. Economists use this concept to help individuals and businesses better understand the cost of their decisions beyond just monetary terms, as it includes all potential gains from alternative choices.