Opportunity cost refers to the value of the next best alternative that is forgone when making a decision. In this context, we need to evaluate the given options to identify which one illustrates this concept most clearly.
Among the options presented:
- a) A country chooses to produce bananas instead of wheat.
- b) A country chooses to invest in manufacturing and agriculture.
- c) A country chooses to specialize in producing paper products.
The best example of opportunity cost is option a) A country chooses to produce bananas instead of wheat. By deciding to allocate resources to banana production, the country effectively gives up the opportunity to produce wheat. This choice embodies the essence of opportunity cost.
In contrast, while options b and c involve choosing between different types of investments and specializations, they do not highlight the direct trade-off between two specific goods. Thus, while they involve decisions about resource allocation, they don’t exemplify opportunity cost as clearly as the first option does.