Which statement best defines opportunity cost?

• A. The monetary cost of production.
• B. The total cost of all options.
• C. The value of the next best alternative forgone.
• D. The benefit gained from the chosen option.

Answer: (C)

Opportunity cost is the value of the next best alternative you give up when you make a choice. It exists because resources are scarce, so picking one option means you forgo the benefits you would have gotten from the best alternative. This definition focuses on forgone value, which can be money, time, or other satisfaction, not just the monetary price paid. Monetary cost alone (the explicit price) doesn’t capture what you miss out on by not choosing the other option. Similarly, the benefit gained from the chosen option describes what you receive, not what you sacrifice.