The Opportunity Cost of an Activity Means The

question 103

Multiple Choice

The opportunity cost of an activity means the:

• A) amount of money the activity costs.
• B) number of hours that is required to engage in this activity.
• C) expected gains by engaging in the activity.
• D) amount of other things that must be sacrificed in order to engage in the activity.
• E) expected gains minus the expected costs of engaging in the activity.

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Definitions:

Productive Efficiency

A situation where goods and services are produced at the lowest possible cost and resources are utilized optimally.

Cost Minimization

A strategy employed by businesses to reduce production or operational costs to the lowest possible level without sacrificing quality or output.

Marginal Cost

The cost implicated in generating an added unit of a product or service.

Efficient Allocation

The distribution of resources in a way that maximizes the net benefit received by an economy.