ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The concept of trade-offs due to scarcity is formalized by the concept of opportunity cost.

Detailed explanation-2: -What is the simple definition of opportunity cost? Opportunity cost is the value of what you lose when choosing between two or more options. Every choice has trade-offs, and opportunity cost is the potential benefits you’ll miss out on by choosing one direction over another.

Detailed explanation-3: -Opportunity cost is a direct implication of scarcity. People have to choose between different alternatives when deciding how to spend their money and their time.

Detailed explanation-4: -The idea behind opportunity cost is that the cost of one item is the lost opportunity to do or consume something else; in short, opportunity cost is the value of the next best alternative.

Detailed explanation-5: -Opportunity Cost: The benefit that would have been received by taking the next best action instead of the action taken. Absolute Advantage: The ability of an actor to produce more of a good or service than a competitor.