Which of the following can be an opportunity cost?

A) Interest on cost of inventory
B) Cost of idle capacity
C) Cost of underutilized labor
D) The decline in an asset's value
E) All of the above

Question

Which of the following can be an opportunity cost?A) Interest on cost of inventoryB) Cost of idle capacityC) Cost of underutilized laborD) The decline in an asset's valueE) All of the above

Vibhu Bajaj · Accepted Answer

Final Answer : E, Explanation :  All of the above can be considered opportunity costs. Opportunity cost refers to the cost of the best alternative forgone, and any of the above could represent that alternative. For example, choosing to invest in inventory could mean foregoing the opportunity to earn interest on that money. Choosing to maintain idle capacity could mean giving up the opportunity to use that space for more productive purposes. Choosing to underutilize labor could mean giving up the opportunity to use those workers for other tasks. A decline in an asset's value could mean foregoing the opportunity to sell that asset for a higher price in the future.

Which of the following can be an opportunity cost?

A) Interest on cost of inventory
B) Cost of idle capacity
C) Cost of underutilized labor
D) The decline in an asset's value
E) All of the above

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