CCBA · Question #39
A business analyst is helping management determine which solution they should choose. As it happens that the organization can only choose one of the two solutions due to time and resource restrictions
The correct answer is C. $109,000. Opportunity cost is defined as the loss of potential gain from other alternatives when one alternative is chosen. In this scenario, by choosing Solution A over Solution B, the organization is foregoing the additional potential gain of $565,000 - $456,000, which equals $109,000. T
Question
A business analyst is helping management determine which solution they should choose. As it happens that the organization can only choose one of the two solutions due to time and resource restrictions. Solution A worth $456,000 to the organization while solution B worth $565,000 to the organization. While solution A costs less, it is less risky and takes less time to complete so management elects to seize Solution A. What is the opportunity cost?
Options
- A$565,000
- BThere is not enough information to know how much the solution will cost the organization.
- C$109,000
- D$456,000
How the community answered
(40 responses)- A13% (5)
- B3% (1)
- C78% (31)
- D8% (3)
Explanation
Opportunity cost is defined as the loss of potential gain from other alternatives when one alternative is chosen. In this scenario, by choosing Solution A over Solution B, the organization is foregoing the additional potential gain of $565,000 - $456,000, which equals $109,000. This is the opportunity cost of choosing Solution A.
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