Question

Which situation is the best example of opportunity cost?


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

Answer 1

A country chooses to produce bananas instead of wheat.

Explanation: Opportunity cost is the next-best alternative forgone. Producing bananas means the country gives up producing wheat, so the wheat output is the opportunity cost.