The Benefit Foregone by Not Choosing an Alternative Course of Action

question 125

Multiple Choice

The benefit foregone by not choosing an alternative course of action is referred to as a(n) :

• A)opportunity cost.
• B)sunk cost.
• C)variable cost.
• D)incremental cost.

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Definitions:

Marginal Product

The extra production obtained by employing an additional unit of a variable resource, while keeping the rest of the inputs unchanged.

Fixed Cost

Expenses that do not change in the short term regardless of the level of production or output.

Average Fixed Cost

The fixed costs of production (costs that don't change with the level of output) divided by the quantity of output produced.

Marginal Product

The additional output resulting from a one-unit increase in the input of a particular productive resource, holding all other inputs constant.