ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Opportunity Cost
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Missed Opportunities
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Misused Resources
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Scarce Options
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Detailed explanation-1: -Opportunity cost refers to what you have to give up to buy what you want in terms of other goods or services. When economists use the word “cost, ” we usually mean opportunity cost.
Detailed explanation-2: -Opportunity cost is what you give up (the benefits of the next best alternative) when you make a choice.
Detailed explanation-3: -“Opportunity cost is the value of the next-best alternative when a decision is made; it’s what is given up, ” explains Andrea Caceres-Santamaria, senior economic education specialist at the St. Louis Fed, in a recent Page One Economics: Money and Missed Opportunities.
Detailed explanation-4: -Opportunity cost is the value of what you lose when choosing between two or more options. Every choice has trade-offs, and opportunity cost is the potential benefits you’ll miss out on by choosing one direction over another.
Detailed explanation-5: -Using opportunity cost to invest your resources If you choose one, you necessarily have to give up on others. They are mutually exclusive. The value of those others is your opportunity cost.