ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -In microeconomic theory, the opportunity cost of a choice is the value of the best alternative forgone where, given limited resources, a choice needs to be made between several mutually exclusive alternatives.

Detailed explanation-2: -“Opportunity cost is the value of the next-best alternative when a decision is made; it’s what is given up, ” explains Andrea Caceres-Santamaria, senior economic education specialist at the St.

Detailed explanation-3: -Opportunity cost is the value of the next best alternative forgone as a result of making a decision. Opportunity cost is a function of scarcity. Because of scarcity, people are faced with trade-offs in how they use their limited resources.

Detailed explanation-4: -When economists refer to the “opportunity cost” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.