ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Trade-offs and Opportunity Cost. Trade-offs are all the alternatives that we give up whenever we choose one course of action over others. The most desirable alternative given up as a result of a decision is known as opportunity cost.

Detailed explanation-2: -A trade-off (or tradeoff) is a situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects. In simple terms, a tradeoff is where one thing increases, and another must decrease.

Detailed explanation-3: -A trade-off involves a sacrifice that must be made to get a certain product or experience. A person gives up the opportunity to buy ‘good B, ’ because they want to buy ‘good A’ instead.

Detailed explanation-4: -The term “trade-off” is employed in economics to refer to the fact that budgeting inevitably involves sacrificing some of X to get more of Y. With a fixed amount of savings, one can buy a car or take an expensive vacation, but not both. The car can be “traded off” for the vacation or vice versa.

Detailed explanation-5: -Trade-offs occur when activities are incompatible. Simply put, a trade-off means that more of one thing necessitates less of another. An airline can choose to serve meals-adding cost and slowing turnaround time at the gate-or it can choose not to, but it cannot do both without bearing major inefficiencies.