6
QuizMultiple Choice

Earning Income — Test

Question 6 • Personal Finance

What is the most important thing people must do to understand the opportunity costs for any big economic decision they make?

Answer
A
They must look at the time required to make the decision and see it come to pass.
B
They must investigate both the explicit and implicit costs involved in the decision.
C
They must enlist the support of everyone involved in making the decision a reality.
D
They must make an accurate budget and make sure there is enough money available.

Explanation

Opportunity cost is the value of the next-best alternative that is given up when a decision is made. To understand it, people need to consider both explicit costs, such as money paid, and implicit costs, such as the value of time or other opportunities sacrificed. Therefore, the correct choice is to investigate both explicit and implicit costs involved in the decision.

AI-written and checked against the verified answer.

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