Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
The total costs incurred in production
B
The benefit lost when choosing one alternative over another
C
The fixed costs that cannot be recovered
D
The total revenue generated from sales
Understanding the Answer
Let's break down why this is correct
Answer
Opportunity cost is the idea that when you choose one option, you give up the chance to do something else. In the context of resource allocation for profit maximization, it means that when a business decides to use its resources, like money or time, for one purpose, it misses out on the benefits it could have gained from other uses. For example, if a company spends its budget on marketing a new product, the opportunity cost is the profit it could have made by investing that money in improving its existing products. Understanding opportunity cost helps businesses make better decisions to maximize their profits by considering what they are sacrificing with each choice. This way, they can allocate their resources more effectively to achieve the best possible outcomes.
Detailed Explanation
Opportunity cost is what you give up when you choose one option over another. Other options are incorrect because This option confuses total costs with opportunity cost; Fixed costs are expenses that don't change, not what you miss out on by making a choice.
Key Concepts
opportunity cost
Topic
Resource Allocation for Profit Maximization
Difficulty
easy level question
Cognitive Level
understand
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