ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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. When you spend part of your income on certain things, you give up spending it on other things.

Detailed explanation-2: -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.

Detailed explanation-3: -What are some other examples of opportunity cost? A student spends three hours and $20 at the movies the night before an exam. The opportunity cost is time spent studying and that money to spend on something else.

Detailed explanation-4: -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.