Question

______________ can be measured as the income that could have been earned on an asset,

based on the potential rate of return that is lost or sacrificed when one alternative use of the
asset is chosen over another:
A. Target cost
B. Sunk cost
C. Opportunity cost
D. Allocated cost

Answer 1

Opportunity cost is the correct answer, representing the value of the next best alternative that is given up when making a decision.

Step-by-step explanation:

The correct answer to the question is C. Opportunity cost. Opportunity cost can be measured as the income that could have been earned on an asset, based on the potential rate of return that is lost or sacrificed when one alternative use of the asset is chosen over another.

For example, if someone buys a bicycle for $300, the opportunity cost is the other things they could have bought with that $300. This cost can also be measured in terms of time or other forfeited resources, which might not be accurately represented by the monetary price alone.