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 cost is known as......................
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Opportunity Cost
Resources are scarce, so an economy that uses more of them to produce one good has less left for the other. Having a little more of one good therefore always means giving up some of the other. This cost, measured by the amount of the other good that has to be forgone, is the opportunity cost; it applies to an individual as well as to society, and is sometimes called the economic cost.
Why the other options are incorrect
Option (1) Marginal Cost — Incorrect. It is the change in total cost when one more unit of output is produced, measured in money, not in units of another good given up.
Option (3) Average Cost — Incorrect. It is total cost per unit of output.
Option (4) Total Variable Cost — Incorrect. It is the cost of the variable inputs, such as labour, used to produce a given output.
Note: A same/similar question was asked in CUET (UG) in the papers below.
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 15-05 S1 | 27-05 S2 28-05 S2* | – | – | – |
* A similar question.
NCERT (2025-26): “Production Possibility Frontier … Therefore, 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 costa of an additional unit of the goods.…” |