Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
marginal cost
B
opportunity cost
C
sunk cost
D
fixed cost
Understanding the Answer
Let's break down why this is correct
Answer
When a company decides to produce phones instead of burgers, the opportunity cost is the value of the burgers they could have made but chose not to. This means that by focusing on phones, they miss out on the profits and benefits they would have gained from selling burgers. For example, if making burgers could earn the company $10,000, that amount is the opportunity cost of choosing to make phones instead. Understanding opportunity cost helps businesses make better decisions by considering what they are giving up for what they are gaining. So, it's important to weigh these choices carefully to maximize overall benefits.
Detailed Explanation
Opportunity cost is what you give up when you choose one option over another. Other options are incorrect because Marginal cost is about the extra cost of making one more item; Sunk cost refers to money already spent that can't be recovered.
Key Concepts
Opportunity Cost
Resource Allocation
Trade-offs
Topic
Opportunity Cost Analysis
Difficulty
hard level question
Cognitive Level
understand
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