ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -OPPORTUNITY COST: The next best alternative given up when making a financial choice. SCARCITY: The economic condition of limited resources that prevents people from having everything they want.

Detailed explanation-2: -Opportunity cost is the value of the next best alternative forgone as a result of making a decision. Opportunity cost is a function of scarcity. Because of scarcity, people are faced with trade-offs in how they use their limited resources.

Detailed explanation-3: -Opportunity cost is the value of the best opportunity forgone in a particular choice. It is not simply the amount spent on that choice. The concepts of scarcity, choice, and opportunity cost are at the heart of economics. A good is scarce if the choice of one alternative requires that another be given up.

Detailed explanation-4: -When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource.