Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Opportunity cost only considers monetary costs and ignores time lost.
B
Economic profit is calculated by subtracting both explicit and implicit costs from total revenue.
C
Opportunity cost includes the value of the next best alternative that is forgone.
D
Accounting profit is the same as economic profit and does not require consideration of opportunity costs.
E
Understanding opportunity cost can help businesses make more informed decisions about resource allocation.
Understanding the Answer
Let's break down why this is correct
Answer
Opportunity cost is the value of what you give up when you make a choice. In profit calculation, it helps you understand the true cost of your decisions by considering not just the money spent, but also the benefits you miss out on. For example, if you spend your savings on a new car instead of investing that money to earn interest, the opportunity cost is the interest you could have earned. When analyzing profits, it's important to include these hidden costs to get a clear picture of your financial situation. Therefore, statements that mention lost benefits or alternatives not chosen are likely correct in reflecting opportunity cost.
Detailed Explanation
All options misunderstand opportunity cost. Other options are incorrect because This suggests opportunity cost only looks at money; This mixes up profit types.
Key Concepts
Opportunity Cost
Economic Profit
Accounting Profit
Topic
Opportunity Cost in Profit Calculation
Difficulty
easy level question
Cognitive Level
understand
Ready to Master More Topics?
Join thousands of students using Seekh's interactive learning platform to excel in their studies with personalized practice and detailed explanations.