ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In economics, the term trade-off is often expressed as an opportunity cost, which is the most preferred possible alternative. A trade-off involves a sacrifice that must be made to get a certain product or experience. A person gives up the opportunity to buy ‘good B, ’ because they want to buy ‘good A’ instead.

Detailed explanation-2: -The difference between trade-offs and opportunity cost is that a trade-off refers to the decision to pick an alternative, whereas opportunity cost refers to the value of the forgone alternative. Opportunity cost refers to the value of the next best alternative of an economic decision.

Detailed explanation-3: -Trade-off is sacrificing a certain option to choose another opportunity whereas opportunity cost is the cost that has to incur as a result of selecting the so-called opportunity. Thus, the opportunity cost is always the result of tradeoff. This is the main difference between Opportunity Cost and Trade Off.

Detailed explanation-4: -The given statement is true. Opportunity cost is defined as the next best alternative, which is forgone. It implies that this cost is the potential benefit that an individual or a firm might have gained or missed out from choosing the next best alternative.

Detailed explanation-5: -Opportunity costs can be viewed as a trade off. Trade offs happen in decision making when one option is chosen over another option. Opportunity costs sums up the total cost for that trade off.