Understanding Opportunity Cost

What is the primary concept of opportunity cost?

• The direct financial cost of a decision

• The immediate benefit of a decision

• The value of the next best alternative foregone

• The total cost of all alternatives

In the personal investment example, what is the opportunity cost of choosing stocks over property?

• The potential rental income and property value increase

• The dividends received from stocks

• The immediate cash flow from stocks

• The interest earned from a savings account

In the business resource allocation example, what is the opportunity cost of focusing on TV ads?

• The immediate sales increase from TV ads

• The potential growth from online marketing

• The brand recognition from TV ads

• The cost of producing TV ads

How does understanding opportunity cost contribute to economic efficiency?

• By increasing the total resources available

• By maximizing short-term profits

• By avoiding waste on less productive uses

• By reducing the cost of production

Why is opportunity cost important in strategic planning?

• It helps in setting short-term goals

• It focuses on immediate financial returns

• It guides towards maximizing long-term gains

• It reduces the need for risk assessment