Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Opportunity cost is only concerned with monetary costs.
B
Understanding opportunity cost helps evaluate trade-offs in resource allocation.
C
Opportunity cost includes both explicit and implicit costs of foregone alternatives.
D
Opportunity cost can change depending on the alternatives available at the time of decision-making.
E
Opportunity cost is irrelevant in personal finance decisions.
Understanding the Answer
Let's break down why this is correct
Answer
Opportunity cost is the idea that when you make a choice, you give up something else that could have been valuable to you. For example, if you decide to spend your afternoon studying for a test instead of going to a movie, the opportunity cost is the enjoyment and relaxation you would have experienced at the movie. This concept helps you understand that every decision has trade-offs, and considering these trade-offs can lead to better choices. When making decisions, it’s important to think about what you are sacrificing, which can help you weigh the benefits of each option more clearly. So, accurately describing opportunity cost means recognizing that it involves the value of the next best alternative you forgo when you make a choice.
Detailed Explanation
Other options are incorrect because Many people think opportunity cost is just about money; Some might believe that understanding opportunity cost doesn't help with choices.
Key Concepts
Opportunity Cost
Trade-offs
Resource Allocation
Topic
Opportunity Cost Analysis
Difficulty
hard level question
Cognitive Level
understand
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