ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -All choices, whether they are made by individuals or by groups of individuals such as governments, have a cost associated with them; economists call this an Opportunity Cost. Opportunity cost is the value of the benefits of the foregone alternative, of the next best alternative that could have been chosen, but was not.

Detailed explanation-2: -The costs of choices are that as individuals choose a certain action or make a certain economic decision, they lose the benefits that could have been gained if they chose the other option. Moreover, by choosing one thing over the other, the value that the untaken choice could have generated is also lost.

Detailed explanation-3: -Because of scarcity, every time we do one thing we necessarily have to forgo doing something else desirable. So there is an opportunity cost to everything we do, and that cost is expressed in terms of the most valuable alternative that is sacrificed….

Detailed explanation-4: -Every choice has an opportunity cost and opportunity costs affect the choices people make. The opportunity cost of any choice is the value of the best alternative that had to be forgone in making that choice.

Detailed explanation-5: -Answer and Explanation: The statement, “Scarcity is defined as the situation that exists when the quantity demanded for a good is greater than the quantity supplied, ” is False. The statement describes a shortage, which is a temporary condition that can and will be fixed within the price system of a free market.