Final answer:
Opportunity cost is the benefit foregone by choosing one alternative over another. It encompasses the value of the next best alternative that is not chosen. For example, the opportunity cost of buying a burger might be the bus tickets one could have bought with the same money.
Step-by-step explanation:
The concept of opportunity cost is a fundamental principle in economics and business that refers to the benefit or value that is given up by choosing one alternative over another. For instance, if a person has $10 and decides to spend it on a movie ticket, the opportunity cost is what that person could have purchased instead with the same $10, such as a meal or a book.
Answering the student's question, the opportunity cost refers to option C: the benefit given up by choosing an alternate course of action. In any decision-making process, the opportunity cost represents the value of the foregone alternative that was not chosen. It is not just about the monetary cost but includes any other benefits that would have been enjoyed by taking the second-best option.
For example, if Alphonso chooses to buy a burger instead of using his money for bus tickets, the opportunity cost of the burger is the four bus tickets he has to forego. The concept assumes that, because resources (such as money and time) are limited, people and businesses must allocate them carefully to maximize their utility or satisfaction. Therefore, understanding opportunity cost helps in making more informed decisions.