Opportunity cost is a fundamental concept in economics that refers to the value of the next best alternative that must be foregone in order to pursue a certain action. When deciding between different options, the opportunity cost is what you give up from the second best option when you choose the best available option.
To determine the correct answer from the given options, let's examine each choice:
(a) Number of units gained – This refers to the amount of units acquired or gained from a decision, which does not relate to opportunity cost.
(b) Number of units sacrificed – While this partially aligns with the concept of opportunity cost, it is not a complete definition since it does not necessarily capture the idea of the value of the foregone alternative.
(c) Cost of the next best alternative foregone – This option correctly captures the essence of opportunity cost, as it directly means the cost of the next most valued alternative that is given up when a choice is made.
(d) Cost of the next best alternative gained – This is incorrect because it suggests cost is associated with a gained alternative rather than a foregone one, which contradicts the definition of opportunity cost.
Therefore, the correct answer is:
(c) Cost of the next best alternative foregone.
