What is a key impact of oversubscribing CPU resources in a virtualized environment?

In a virtualized environment, oversubscribing CPU resources can lead to potential degradation of application performance. This occurs because when more virtual CPUs (vCPUs) are assigned to virtual machines (VMs) than there are physical CPU cores available on the host, contention for CPU resources can arise.

When multiple VMs are trying to access CPU resources simultaneously, it can lead to scenarios where the CPU is overcommitted, causing some VMs to experience delays or slower response times as they wait for CPU cycles to become available. This is especially critical for resource-intensive applications that require significant processing power.

In contrast, the other options do not accurately reflect the outcomes of oversubscribing CPU resources. Improved application performance is unlikely in this scenario, and there is no direct correlation to increased hardware costs or a decrease in CPU utilization in the context of oversubscription. Instead, effective CPU utilization might be initially seen, but the overall performance of applications running on those VMs would suffer due to the contention created.