ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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: -Opportunity cost refers to what you have to give up to buy what you want in terms of other goods or services.

Detailed explanation-3: -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-4: -The opportunity cost of choosing a project over the other, i.e. it is the alternative you must give up while making a choice. On the other hand, trade-off refers to all the other actions which we could be doing, apart from what we are doing.

Detailed explanation-5: -Trade-offs are the alternatives people give up when they make choices. Trade-offs CREATE opportunity costs. Opportunity cost is the “value” of something that is given up to get something else they wanted. In other words, it is the next-best alternative.