What is the correct answer of the opportunity cost from the given options ?
Answer & explanation
Correct answer: option 3
The correct answer is option (3) : There is always a cost of having a little more of one good in term of the amount of the other good that has to be forgone
Opportunity cost refers to the value of the next best alternative that must be forgone or sacrificed when a choice is made. If we want to have more of one of the goods, we will have less of the other good. Thus, there is always a cost of having a little more of one good in terms of the amount of the other good that has to be forgone. This is known as the opportunity cost of an additional unit of the goods.