ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Two months membership at a gym that costs $50 a month.
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A new pair of jeans and shirt.
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A nice dinner with a friend.
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All of the above
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Detailed explanation-1: -trade-offs In economics, a trade-off is defined as an “opportunity cost.” For example, you might take a day off work to go to a concert, gaining the opportunity of seeing your favorite band, while losing a day’s wages as the cost for that opportunity.
Detailed explanation-2: -An example of a trade-off in a real-world scenario is: A family lives on five acres in the country and the parent commutes an hour and a half to work in the city. Although the family loves their home and land in the country, they decide to move into the city, reducing the commute to half an hour.
Detailed explanation-3: -Trying to decide whether to take the Fourth of July off to spend with your family, or to go to work and make extra overtime? That’s a trade-off. Trade-offs create opportunity costs, one of the most important concepts in economics. Whenever you make a trade-off, the thing that you do not choose is your opportunity cost.