ECONOMICS
OPPORTUNITY COST
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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to get the best value for money
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because the money comes from taxation
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because a choice is made between alternative uses
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to meet all the people’s needs
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Detailed explanation-1: -This concept acknowledges not just the explicit costs of a choice but also the implicit costs of what you forgo when you make that decision. Opportunity cost provides a framework for decision-making to find the most benefit, particularly for limited resources like time and money.
Detailed explanation-2: -Opportunity cost refers to the loss of other alternatives, when one alternative is chosen over others. For example, given a $1 bill, a person may buy an apple or an orange or a banana. He can not buy all three or any two of it. Thus, he has to chose among buying apple, orange and banana.
Detailed explanation-3: -Trade-offs are our alternative choices, which create opportunity costs, which are the cost of the next-best alternative (trade-offs). It’s important for governments to understand this so they can create opportunities for trade-offs for people who want to find multiple avenues for work.
Detailed explanation-4: -Whenever a choice is made, something is given up. The opportunity cost of a choice is the value of the best alternative given up. Choices involve trading off the expected value of one opportunity against the expected value of its best alternative.