Which of the Following Is True of an Opportunity Cost

question 155

Multiple Choice

Which of the following is true of an opportunity cost?

• A) It is the income foregone by not using a resource in an alternative way.
• B) The higher the opportunity costs, the lower is the relevant cost.
• C) It is recorded as an expense in the accounting records.
• D) It is an unavoidable cost that cannot be changed no matter what action is taken.

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Definitions:

Depletion Cost

The allocation of the cost of natural resources, such as minerals or oil, over the period they are extracted and sold.

Units Extracted

The quantity of resources, such as minerals or oil, removed from the ground or source.

Units Sold

The total number of product units that have been sold during a specific period.

Franchise

A business model that allows individuals or entities to operate a business under an established brand and business system in exchange for fees and adherence to certain standards.