ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The importance of a trade-off is that it is how economic agents choose the best alternative among several options. The difference between trade-offs and opportunity cost is that a trade-off refers to the decision to pick an alternative, whereas opportunity cost refers to the value of the forgone alternative.

Detailed explanation-2: -Opportunity costs are the complete costs of making decisions and using resources. When we apply this concept to money management, we can improve our ability to achieve our own goals. Often when we make an unnecessary purchase, we tend to only think of the cost of that purchase in terms of dollars.

Detailed explanation-3: -Why is opportunity cost important? Opportunity cost is a framework that helps us understand choices and can be used to help select the best choice in how to use a scarce resource (time, money, etc.).

Detailed explanation-4: -trade-off-the giving up of one thing in return for something else. When you buy or do one thing with your money, you have to give up the chance to buy or do something else. This is a trade-off. opportunity cost-what you give up to get what you want.