A government decides to build a new hospital instead of a new motorway. What is the opportunity cost of this decision?

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Question

A government decides to build a new hospital instead of a new motorway. What is the opportunity cost of this decision?

Accepted Answer

The new motorway that was not built — Opportunity cost is the value of the next best alternative foregone, which in this case is the motorway that was not built. Option A is the financial cost, not the opportunity cost. Option B refers to the funding mechanism, not the foregone alternative. Option D is an ongoing operating cost unrelated to the opportunity cost concept.

Answer

The wages paid to hospital workers

Answer

The total construction cost of the new hospital

Answer

The new motorway that was not built

Answer

The taxes collected to fund the new hospital

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