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Opportunity cost of production of a commodity is
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- the cost that the firm could have incurred when a different technique was adopted
- the cost that the firm could have incurred under a different method of production
- the actual cost incurred
- the next best alternative output
- the cost that the firm could have incurred when a different technique was adopted
Correct Option: D
The concept of opportunity cost is based on scarcity and choice. The opportunity cost of a commodity is the next best alternative commodity sacrificed. In other words opportunity cost of a commodity is for going the opportunity to produce alternative goods and services. If one commodity is produced another commodity is sacrificed. So opportunity cost of producing a good is equal to the cost of not producing another commodity.
