economics easy MCQ

The 'Opportunity Cost' of a decision is best defined as:

  1. The total financial cost incurred to execute the decision
  2. The value of the next best alternative that is forgone when a choice is made
  3. The sunk costs that cannot be recovered regardless of the decision
  4. The accounting profit minus the explicit costs of production

Answer: The value of the next best alternative that is forgone when a choice is made

Opportunity cost is the foundational concept of economics, arising from the reality of scarce resources. It is not the sum of all rejected alternatives, but strictly the value of the single *best* alternative you gave up. For example, if you use a free hour to study instead of working a Rs. 500 shift, the opportunity cost of studying is exactly Rs. 500.

Topic Microeconomics - Concepts
Exam Relevance SSC, Railway, UPSC
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