Question : The opportunity cost of production of a commodity is
Option 1: The cost that the firm could have incurred when a different technique was adopted
Option 2: The cost that the firm could have incurred under a different method of production
Option 3: The actual cost incurred
Option 4: The best alternative output
Correct Answer: The best alternative output
Solution : The correct answer is the best alternative output .
The value of the best alternative that must be given up when resources are employed to create that commodity rather than another one is referred to as the opportunity cost of production of a commodity. In other terms, it is the cost of what you give up to generate a specific item. For example, if a farmer has the option of cultivating wheat or maize on a plot of land and chooses wheat, the opportunity cost of producing wheat is the value of the maize they might have produced instead. This cost might be both monetary and in terms of resources.
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