ECONOMICS (CBSE/UGC NET)

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. The word “cost” is commonly used in daily speech or in the news.

Detailed explanation-2: -Opportunity cost is commonly defined as the next best alternative. Also, known as the alternative cost, it is the loss of gain which could have been gained if another alternative was chosen.

Detailed explanation-3: -In economics, opportunity cost represents the potential gain that is lost when choosing one investment choice over another. In short, it’s a value of the road not taken.

Detailed explanation-4: -Examples of Opportunity Cost. Someone gives up going to see a movie to study for a test in order to get a good grade. The opportunity cost is the cost of the movie and the enjoyment of seeing it.

Detailed explanation-5: -Opportunity Cost-Key Takeaways There are two types of opportunity costs: explicit and implicit. Explicit Opportunity Costs are direct monetary costs that are lost when making a decision. Implicit Opportunity Costs do not consider the loss of direct monetary value when making a decision.