ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Study of how people & societies use limited resources to satisfy unlimited wants; management of scarcity & choice.
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The decision by individual of what to do, which necessarily involves decision of what not to do.
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Anything (land, labor, and capital) that can be used to produce something else; including natural resources (from physical environment) and human resources (labor, skill, intelligence).
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None of the above
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Detailed explanation-1: -A. Definition: Individual choice is the decision by an individual of what to do, which necessarily involves a decision of what not to do. B. Resources are scarce.
Detailed explanation-2: -To do that, we’re going to look at four basic principles of individual decision making that are important in an economic context: (1) People face trade-offs, (2) Trade-offs lead to opportunity cost, (3) People think at the margin, and (4) People respond to incentives.
Detailed explanation-3: -Ultimately, economics is the study of choice. Because choices range over every imaginable aspect of human experience, so does economics. Economists have investigated the nature of family life, the arts, education, crime, sports, law-the list is virtually endless because so much of our lives involves making choices.
Detailed explanation-4: -Economists assume that individuals make choices that seek to maximize the value of some objective, and that they define their objectives in terms of their own self-interest. Individuals maximize by deciding whether to do a little more or a little less of something.