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Questions and Answers
What is required to accurately calculate the opportunity cost of an action?
What is required to accurately calculate the opportunity cost of an action?
- Identifying the direct financial expenses of all possible alternative actions.
- Calculating the monetary value of the next best alternative to that action. (correct)
- Considering only the financial benefits of the chosen action.
- Choosing the most expensive alternative action.
Which of the following accurately describes the concept of opportunity cost?
Which of the following accurately describes the concept of opportunity cost?
- Opportunity costs only measure direct out of pocket expenditures.
- To calculate accurately the opportunity cost of an action we need to first identify the least feasible alternative to that action.
- The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions. (correct)
- Opportunity cost is the direct financial expense incurred in choosing a particular action.
Which factor contributes to the complexity of accurately determining opportunity costs?
Which factor contributes to the complexity of accurately determining opportunity costs?
- Direct out-of-pocket expenditures of the chosen action.
- The financial gain from the chosen action.
- The number of feasible alternative actions available. (correct)
- The ease of identifying the next best alternative.
In what way do opportunity costs differ from direct financial expenses?
In what way do opportunity costs differ from direct financial expenses?
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