In the context of opportunity costs, which of the following scenarios best illustrates the relationship between marginal cost and explicit costs when a company decides to allocate resources to a new project?

Opportunity cost is the value of what you give up when you choose one option over another. When a company decides to allocate resources to a new project, it has to consider both explicit costs, which are the direct, out-of-pocket expenses, and marginal costs, which are the additional costs incurred when producing one more unit of something. For example, if a company spends $100,000 to start a new product line, the explicit costs are the money spent on materials and labor. However, the marginal cost comes into play when the company decides to produce one more unit of that product, which may include extra labor or materials needed for that additional unit. Thus, understanding both costs helps the company evaluate whether the potential benefits of the new project outweigh the costs of not pursuing other opportunities.