Paper 3 · November 2006 · Opportunity Cost and Scarcity
Opportunity cost is best defined as...
Athe combined total of a firm's explicit and implicit production costs
Bthe total monetary expenditure incurred in producing a particular good
Cthe market price that a consumer must pay to acquire a good or service
Dthe value of the next best alternative forgone when a choice is made
Explanation
Opportunity cost captures the idea that, under scarcity, choosing one option means giving up the next best alternative. It is not simply the money spent producing or buying something (that is monetary cost or price), and it is not the same as a firm's total explicit-plus-implicit production costs, which is a broader accounting concept.
Derived from ZIMSEC Economics Paper 3, November 2006, Q1