ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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During World War II, only a certain amount sugar & gasoline were allowed for purchase
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The citizens of the United States giving up certain goods, such as sugar, in exchange for freedom provided by the war
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Resources shifted from the citizens to the World War II effort
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Using margarine instead of butter
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Detailed explanation-1: -A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else. A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment).
Detailed explanation-2: -For example, choosing public transportation to travel to a particular destination by foregoing the option of traveling in one’s own car is a good example of opportunity cost, because you end up saving money which needs to be spent on fuel.
Detailed explanation-3: -When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.
Detailed explanation-4: -A simple example of opportunity cost is to let us suppose that a person is having Rs. 50000 in his hand and He has the option to keep it with himself at home or deposit in the bank which will generate interest of 4% annually so now the opportunity cost of keeping money at home is Rs. 2000 per year as opposed to Bank.