Which of the following statements about opportunity costs is TRUE?
I. The opportunity cost of a given action is equal to the value foregone of all feasible alternative actions.
II. Opportunity costs only measure direct out of pocket expenditures.
III. To calculate accurately the opportunity cost of an action we need to first identify the next best alternative to that action.
a) III only.
b) I and III only.
c) II only.
d) None of the statements is true.
Answer: a) III only.
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