Question

Question 1 of 10

A business must decide whether to open a new office in China. If it opens the
branch, it will increase its chances of selling a high volume of its products in
China. On the other hand, the business will have to spend a lot of money to
make the branch operational.
What would be an opportunity cost for the business if it chooses not to open
the new branch in China?
A. The business would lose the chance to make more money in
China.
B. The business would increase its marginal benefits on each
product it makes.

Answer 1

A. The opportunity cost for the business if it chooses not to open the new branch in China would be that the business would lose the chance to make more money in China.

Opportunity cost refers to the cost of the next best alternative that must be forgone in order to pursue a certain action. In this case, if the business chooses not to open the new branch in China, the opportunity cost would be the potential revenue and profits that could have been generated by selling products in China.