ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Trade-offs are pervasive in competition and essential to strategy. They create the need for choice and protect against repositioners and straddlers.

Detailed explanation-2: -A trade-off is a kind of compromise that involves giving up something in return for getting something else. When looking you for an after-school job, you might have to make a trade-off: a lower hourly wage for a more convenient location, for example.

Detailed explanation-3: -All choices, whether they are made by individuals or by groups of individuals such as governments, have a cost associated with them; economists call this an Opportunity Cost. Opportunity cost is the value of the benefits of the foregone alternative, of the next best alternative that could have been chosen, but was not.

Detailed explanation-4: -An example of a trade-off and its opportunity cost is: Liv gets $100 for her birthday and decides to spend the whole $100 on a new pair of shoes instead of using it for a nice dinner with her boyfriend or buying a new pair of jeans and a shirt or getting a gym membership.