Economics • Economic BasicsMedium
What does the concept of 'Opportunity Cost' refer to in microeconomics?
A. The monetary expenses incurred strictly on raw materials
B. The total accounting profit earned by a sole proprietor
C. The value of the next best alternative foregone when making a choice✓ Correct Answer
D. The minimum wage required by labor market regulations
💡 Solution & Explanation
Opportunity cost represents the loss of potential gain from other alternatives when one alternative is chosen, serving as a fundamental principle in resource allocation under scarcity. Accounting costs measure explicit monetary outlays, whereas opportunity costs encompass both explicit and implicit values. Rational economic agents weigh these foregone benefits before committing limited resources.
More Economics Economic Basics questions
- In the study of economic growth models, what is the primary distinction between the Harrod-Domar model and…
- What does a horizontal long-run aggregate supply (LRAS) curve imply under the Keynesian perspective?
- What does the 'Remedial Income Hypothesis' or 'Absolute Income Hypothesis' primarily fail to account for,…
- What is the primary currency used in the state economy of Uttarakhand?
- What does the 'Permanent Income Hypothesis' formulated by Milton Friedman state regarding consumer spending…