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Which situation best describes an opportunity cost? A. A corporation that begins selling a new product sees its overall profit increase. B. A person decides to go back to college in order to transition into a new career C. A marketing company goes out of business because it could not find enough clients D. An employer who hires a new employee can’t hire the other people she interviewed

User Gelmir
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Final answer:

The situation that best describes an opportunity cost is B, where a person decides to go back to college, as they give up possible income and career opportunities to pursue education. Opportunity cost is the next best alternative given up when making a decision.

Step-by-step explanation:

Opportunity cost is a fundamental principle of economics that represents what one must give up to obtain what he or she desires. It is essentially the value of the next best alternative foregone as a result of making a decision. Among the given scenarios, situation B, where a person decides to go back to college to transition into a new career, best describes opportunity cost. This is because they are potentially giving up their current employment income and the possible opportunities that come with it to pursue a different long-term goal. The cost of their education and the time invested in it represent the opportunities forgone, such as continuing to earn a salary or gaining more experience in their current field.

Contrast this with the other scenarios, A and C do not represent a trade-off of a foregone alternative but are the results of business activities, and D describes a situation of limited resources but not the opportunity cost to the employer herself.

User Unspokenblabber
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Answer:

The correct answer is D. An employer who hires a new employee can’t hire the other people she interviewed.

Step-by-step explanation:

Opportunity costs are the costs of an economic choice expressed in terms of the best missed opportunity: it values the unrealized return of the best possible alternative compared to the final decision made (Choosing is losing). The profit that is obtained from these costs is the economic profit.

The opportunity costs are therefore broader than the accounting costs. The accounting costs only provide a monetary (expressed in money) valuation of the amount spent to acquire or do something. The opportunity costs also examine what a possible alternative use of resources could have yielded.

User Eun Woo Song
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