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QuizMultiple Choice

International Trade

Question 1 • IL-Economics

Which situation is the best example of opportunity cost?

Answer
A
A country chooses to produce bananas instead of wheat.
B
A country chooses to invest in manufacturing and agriculture.
C
A country chooses to specialize in producing paper products.
D
A country chooses to export all of its products.

Explanation

Opportunity cost is the value of the next-best alternative that is given up when a choice is made. Choosing to produce bananas instead of wheat means giving up the wheat the country could have produced, so this is the best example. The other choices do not clearly identify one option being sacrificed for another.

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