Which situation best demonstrates the concept of opportunity cost?

The concept of opportunity cost revolves around the idea of forgoing potential benefits when choosing one alternative over another. In the situation where a company delays opening several branch offices to invest in research and development, the opportunity cost is clearly illustrated. By choosing to allocate resources toward research and development, the company is giving up the immediate potential profits and market expansion that could come from opening new branch offices.

This choice suggests a long-term investment strategy where the company anticipates that the benefits from improved products or services developed through research and development will outweigh the short-term gains that could have been realized from new branches. The decision highlights the trade-off between immediate action (opening branches) and a potentially more lucrative, albeit delayed, investment in innovation and development. This makes it a clear representation of opportunity cost, as it emphasizes the value of the foregone option in relation to the chosen investment.