ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Answer and Explanation: Thus, the opportunity cost of a defense buildup that raises military spending from 4.0 to 4.3% of an $18 trillion economy is 54 billion.

Detailed explanation-2: -If the government build a new road, then that money can’t be used for alternative spending plans, such as education and healthcare. Tax cuts. If the government offers an income tax cut, the opportunity cost is that government revenue cannot be used to finance some aspect of government spending.

Detailed explanation-3: -The opportunity cost of government spending on a particular program is the foregone benefit of increased spending on another program. For public goods, the marginal benefit of government provision can exceed marginal cost. Marginal benefit does not exceed marginal cost for all goods and services provided publicly.

Detailed explanation-4: -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.