Question 3
Basic ConceptsFrom an economic point of view, an activity does not have a cost when
- A.someone else pays for it
- B.the returns are greater than costs
- C.the choice involves giving up nothing
- D.the government pays for it
- E.it is paid for from a gift.
Show the answer and explanation
Answer: C (the choice involves giving up nothing)
Explanation
Economic cost is opportunity cost; if nothing has to be given up, the opportunity cost is zero.