The Opportunity Cost of a Choice Is

question 81

Multiple Choice

The opportunity cost of a choice is:

• A) the value of the opportunities lost.
• B) the net value of the opportunities gained.
• C) the difference between the benefits and costs of the choice.
• D) sometimes positive or negative.

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Definitions:

Variable Cost

Costs that vary in direct proportion to changes in the level of production or sales activity.

Fixed Costs

Costs that do not fluctuate with the level of production or sales activity, such as rent, salaries, and insurance premiums, remaining constant regardless of business volume.

Break-Even

The point at which total revenues equal total costs, leading to neither a profit nor a loss.

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, used to cover fixed costs and to generate profit.