The Opportunity Cost of an Activity Is the Value of

question 165

Multiple Choice

The opportunity cost of an activity is the value of

• A) an alternative forgone.
• B) the next-best alternative forgone.
• C) the least-best alternative forgone.
• D) the difference between the chosen activity and the next-best alternative forgone.
• E) the alternative one would have preferred to choosE.

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Definitions:

Profit-Maximizing

The approach taken by an enterprise to ascertain the optimal price and output quantity for the highest profit.

MR = MC

A principle in economics stating that profit maximization occurs when marginal revenue equals marginal cost.

Perfectly Competitive Market

An economic theory describing a market where no individual buyers or sellers have the power to influence the price of a product, and where the products offered are homogenous, with no barriers to entry or exit for businesses.

TFC

Total Fixed Costs, which refer to all the costs that do not change with the level of output, including expenses such as rent, salaries, and insurance.