Explanation:

• Option A (Incorrect): Basing investment decisions on opportunity costs is the correct approach, as it involves identifying economic alternatives. This is not a capital allocation pitfall.

• Option B (Incorrect): Decisions based on after-tax cash flows align with capital allocation principles, as they account for tax impacts and avoid errors like omitting or double-counting cash flows. This is not a pitfall.

• Option C (Correct): A common pitfall is focusing on short-run accounting metrics such as EPS, net income, or ROE. Companies may prioritize these metrics over long-term economic benefits, leading to suboptimal investment choices that do not align with shareholder interests.