ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Opportunity cost refers to what you have to give up to buy what you want in terms of other goods or services. When economists use the word “cost, ” we usually mean opportunity cost. The word “cost” is commonly used in daily speech or in the news.

Detailed explanation-2: -If the business takes a decision to consider using bamboo for furniture, then the society has to forego the number of bamboos that could have been used for manufacturing paper. Here, the opportunity cost of producing furniture is the number of papers that are foregone.

Detailed explanation-3: -Opportunity cost is commonly defined as the next best alternative. Also, known as the alternative cost, it is the loss of gain which could have been gained if another alternative was chosen. It can also be explained as the loss of benefit due to a change in choice.

Detailed explanation-4: -In economics, a trade-off is defined as an “opportunity cost.” For example, you might take a day off work to go to a concert, gaining the opportunity of seeing your favorite band, while losing a day’s wages as the cost for that opportunity.

Detailed explanation-5: -Opportunity cost represents the benefits forgone by choosing one option over another. Recognizing opportunity costs can help you make better decisions in all aspects of your life. It can be difficult to identify opportunity costs when the benefits of the alternative choice aren’t easily quantifiable.