Opportunity cost is normally this kind of cost for a farmer.

Opportunity cost is normally this kind of cost for a farmer.

• A. Cash cost
• B. Sunk cost
• C. Non-cash
• D. Fixed cost

Answer: (C)

Opportunity cost is the value of the next-best alternative foregone when a choice is made. For a farmer, this is typically a non-cash cost because it represents foregone income or production potential rather than an actual money outlay. For example, if the land is used to grow corn instead of soybeans, the opportunity cost is the profit that could have been earned from soybeans. No cash is paid just for making the choice; the cost is the income you give up. This differs from a cash cost (money paid), a sunk cost (past money already spent and unrecoverable), and a fixed cost (cost that doesn’t change with output).

Opportunity cost is the value of the next-best alternative foregone when a choice is made. For a farmer, this is typically a non-cash cost because it represents foregone income or production potential rather than an actual money outlay. For example, if the land is used to grow corn instead of soybeans, the opportunity cost is the profit that could have been earned from soybeans. No cash is paid just for making the choice; the cost is the income you give up. This differs from a cash cost (money paid), a sunk cost (past money already spent and unrecoverable), and a fixed cost (cost that doesn’t change with output).