Texes Social Studies Content Practice Exam

The opportunity cost of a good is...

1. The loss of interest in using savings

2. The expenditure on the good

3. The quantity of other goods sacrificed to get another unit of that good

4. The time lost in finding it

The correct answer is: The quantity of other goods sacrificed to get another unit of that good

The opportunity cost of a good refers to the value of the next best alternative that is forgone when a decision is made to allocate resources toward the production or acquisition of that good. In this context, option C accurately describes opportunity cost as it emphasizes the quantity of other goods that must be sacrificed in order to obtain an additional unit of that particular good. This concept is fundamental in economics, as it helps individuals and businesses identify the trade-offs involved in their decisions. When resources are limited, choosing one option often means giving up others. Therefore, understanding opportunity cost allows for better decision-making concerning allocation of those scarce resources. For instance, if a person decides to spend money on a new smartphone, the opportunity cost may be the amount they could have saved or spent on a different service or product. While the other options do touch on certain costs associated with acquiring a good, they do not encapsulate the broader concept of opportunity cost. The loss of interest from savings focuses only on financial aspects, while expenditure on the good overlooks the trade-offs necessary to acquire it, and the time lost in finding the good addresses a different type of cost that does not align with the opportunity cost principle.