Opportunity cost helps the government to:

1. Analyze the question The question asks how the concept of opportunity cost is useful to a government. Opportunity cost is the value of the next best alternative given up when a choice is made.

2. Explain the concept Resources are scarce, so every choice means giving up something else. For example, if the government spends ₦100 billion on roads, it cannot spend that same ₦100 billion on hospitals. The hospitals are the opportunity cost of building the roads.

3. Evaluate each option

• A. Distribute money to citizens: Opportunity cost is not about sharing out money. Distribution is a policy decision, not the purpose of the concept.
• B. Support better production: This is loosely related, since resource allocation affects production. But it is not the direct, standard use of opportunity cost.
• C. Remove competition: This has no connection to opportunity cost. Competition is a market feature.
• D. Prepare budget: A budget is a plan for allocating limited revenue among competing needs such as education, health, defence and infrastructure. The government must compare alternatives and decide what to give up, which is exactly what opportunity cost helps it do.

4. Answer The best answer is D. prepare budget.

5. Exam tip Link opportunity cost with scarcity, choice, and scale of preference. Any question asking how opportunity cost helps a government or individual in decision-making usually points to budgeting or planning, since both involve choosing between alternatives.