ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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There is no money involved.
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There are no products involved.
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There is no exchange with another person.
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A decision is never free. There is usually an alternative which results in an opportunity cost. Not free.
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Detailed explanation-1: -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-2: -Opportunity cost is the value or benefit of an alternative choice compared to the value of what is chosen. The concept of opportunity cost is used in decision-making to help individuals and organizations make better choices, primarily by considering the alternatives.
Detailed explanation-3: -Opportunity Cost is the potential benefit that an individual or an entity loses by choosing one alternative over the other. Economic Cost looks at the overall profits or losses of choosing one alternative over the other in terms of resources, time and cost.
Detailed explanation-4: -Thus a free good is not scarce and therefore is available without limit as desired by the society, thus no other good needs to undergo its production in order to produce a free good, thus it has zero opportunity cost.