Asked by Patrick Garland on Jun 03, 2024
Verified
The amount that a manufacturing company could earn by renting unused portions of its warehouse is an example of an opportunity cost.
Opportunity Cost
The potential benefit that is given up when one alternative is selected over another.
Manufacturing Company
A business entity engaged in the transformation of raw materials into finished goods for sale by using labor, machines, and chemical or biological processing.
- Recognize the significance of opportunity costs and sunk costs in decision-making.
Verified Answer
WC
WESTCOAST COLLECTIVE PODCASTJun 08, 2024
Final Answer :
True
Explanation :
Opportunity cost refers to the cost of the best alternative forgone when making a decision. In this case, the manufacturing company could earn money by renting out unused portions of its warehouse, but choosing not to do so means giving up that potential income, which is an example of opportunity cost.
Learning Objectives
- Recognize the significance of opportunity costs and sunk costs in decision-making.