ECONOMICS
OPPORTUNITY COST
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
The possibility of making an extra million dollars
|
|
|
the competitors
|
|
|
$2 million from buying out its main competitor
|
|
|
$3 millions in new sales
|
Detailed explanation-1: -A market economy is one in which the allocation of resources and the prices of goods and services are determined by market forces, primarily supply and demand. Market economies have little government intervention, allowing private ownership to determine all business decisions concerning how a business is run.
Detailed explanation-2: -The simple definition of opportunity cost is: Opportunity Cost is the benefit foregone related to the alternative choice when a decision is made. In other words, an opportunity cost is the regret you anticipate from not taking another option.
Detailed explanation-3: -The opportunity cost of any activity is the highest-valued alternative that must be given up to engage in that activity.
Detailed explanation-4: -But what about when two or more producers are offering the same goods or services? This results in competition-producers battling over who can make the most profit. Competition is a big motivator.