[Solved] A company can invest Rs. 10 lakh in either Project A or Project B. Project A yields Rs. 15 lakh profit, and Project B yields Rs.... If the company chooses Project A, what is the opportunity cost? | Economic Awareness

Economic Awareness - Sectors of Indian Economy

A company can invest Rs. 10 lakh in either Project A or Project B. Project A yields Rs. 15 lakh profit, and Project B yields Rs. 18 lakh profit. If the company chooses Project A, what is the opportunity cost?

ARs. 15 lakh

BRs. 3 lakh

CRs. 18 lakh

DRs. 33 lakh

Step-by-Step Solution

Step 1: Identify profits from both projects
Project A profit = Rs. 15 lakh; Project B profit = Rs. 18 lakh.
Step 2: Calculate opportunity cost
Opportunity cost = profit forgone by not choosing Project B = Rs. 18 lakh - Rs. 15 lakh = Rs. 3 lakh.
Final Answer:
Rs. 3 lakh → Option B
Quick Check:
Opportunity cost = profit of next best alternative foregone ✅

Quick Trick: Subtract chosen project profit from next best alternative profit.

Common Mistakes:

MISTAKES

Taking total profit of chosen or forgone project as opportunity cost.

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If the company chooses Project A, what is the opportunity cost?

Step 1: Identify profits from both projects

Step 2: Calculate opportunity cost

Final Answer:

Quick Check:

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