ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Using the land for farming.
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Building another McDonald’s.
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Putting in new park.
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Giving WTHS students fancier Chromebooks.
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Detailed explanation-1: -Opportunity cost is what you give up (the benefits of the next best alternative) when you make a choice.
Detailed explanation-2: -A good is scarce if the choice of one alternative requires that another be given up. The existence of alternative uses forces us to make choices. The opportunity cost of any choice is the value of the best alternative forgone in making it.
Detailed explanation-3: -Opportunity Cost Example Deciding whether to spend a gift card on a strawberry smoothie or a banana smoothie. Deciding whether to spend $7 every morning on coffee or consistently invest that money in a retirement account. Deciding whether to invest capital in refurbishing equipment or in better employee training.
Detailed explanation-4: -You cannot do everything you want to, so you are forced to choose between different alternatives. If you choose to spend the day at the beach, you give up going to class or working. This concept of scarcity leads to the idea of opportunity cost.