Which of the following defines the trade-off associated with producing additional units of a product?

The concept that defines the trade-off associated with producing additional units of a product is opportunity cost. Opportunity cost refers to the value of the next best alternative that is forgone when a decision is made to allocate resources towards a particular choice—in this case, producing additional units of a product.

When producers decide to increase output, they often need to use fewer resources for other products or services, which results in the loss of potential benefits from those alternatives. Therefore, understanding opportunity cost is crucial for making informed economic decisions, as it highlights not only the explicit costs involved in production but also the implicit costs of foregoing other opportunities.

In contrast, fixed costs pertain to expenses that do not change with the level of output, average cost relates to the total cost divided by the number of units produced, and sunk costs are past costs that cannot be recovered. None of these concepts directly address the trade-off involved in producing more of a product in terms of alternatives sacrificed, which is the essence of opportunity cost.