The Opportunity Cost of Constructing a New Public Highway Is

question 70

Multiple Choice

The opportunity cost of constructing a new public highway is the:

• A) Money cost of hiring contractors and construction workers for the new highway
• B) Value of other goods and services that are sacrificed in order to construct the new highway
• C) Expected cost of constructing the new highway in a future year
• D) Value of shorter driving times and distances when the new highway is completed

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Definitions:

Prevention Cost

Costs incurred to prevent the production of defective goods or the provision of low-quality services.

Appraisal Cost

Expenditures related to the detection and prevention of defective products or services before delivery to customers.

Internal Failure

Costs incurred due to defects in goods or services before they are delivered to the customer, including scrap and rework expenses.

External Failure

Costs incurred when a product or service fails after being delivered to the customer, leading to returns, repairs, or recalls.