ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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tax revenue from the sale of the timber
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the environment that is destroyed
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the products made from the timber
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the profits of the companies
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Detailed explanation-1: -“Opportunity cost is the value of the next-best alternative when a decision is made; it’s what is given up, ” explains Andrea Caceres-Santamaria, senior economic education specialist at the St. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities.
Detailed explanation-2: -The opportunity cost of any given action or decision is typically defined as the value of the forgone alternative action or decision. That is, opportunity cost is the loss of potential gain from other alternatives when one alternative is chosen.
Detailed explanation-3: -The opportunity cost of an action: can be determined by considering both the benefits that flow from as well as the monetary costs incurred as a result of the action.
Detailed explanation-4: -Opportunity cost is closely related to the concept of scarcity, explained in Concept 1. Since people, businesses and governments cannot get everything they want, they must make choices. With each choice comes a cost or a missed opportunity.