What Are The Concepts Of Opportunity Cost?

What is an example of opportunity cost in your life?

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.

A farmer chooses to plant wheat; the opportunity cost is planting a different crop, or an alternate use of the resources (land and farm equipment)..

What are the four categories of resources?

The factors of production are resources that are the building blocks of the economy; they are what people use to produce goods and services. Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship.

Which of the following best describes the concept of opportunity cost?

Opportunity cost is the value of the best alternative not chosen as it represents the benefit of the next best alternative to the activity chosen. … Your Answer: The dollar value of tuition, books, room and board, and all associated explicit expenses.

What is opportunity cost in decision making?

“Opportunity cost is the cost of a foregone alternative. If you chose one alternative over another, then the cost of choosing that alternative is an opportunity cost. Opportunity cost is the benefits you lose by choosing one alternative over another one.”

Which scenario is the best example of an opportunity cost quizlet?

Which scenario is the best example of an opportunity cost? A computer company issues a recall on its tablets. A computer company produces fewer laptops to meet tablet demand. A computer company reduces the price on last year’s models.

What are the 3 types of scarcity?

Scarcity falls into three distinctive categories: demand-induced, supply-induced, and structural. Demand-induced scarcity happens when the demand of the resource increases and the supply stays the same.

What is opportunity cost the balance?

The Balance / Maddy Price. Opportunity cost is the comparison of one economic choice to the next best choice. These comparisons often arise in finance and economics when trying to decide between investment options. The opportunity cost attempts to quantify the impact of choosing one investment over another.

Which situation is the best example of opportunity cost?

It is the important concept in economics and also the relationship which is between choice and scarcity. A good example of opportunity cost is you can spend money and time on other things but you can not spend time reading books or the money in doing something which can help.

What is opportunity cost easy definition?

Opportunity cost is an economics term that refers to the value of what you have to give up in order to choose something else. In a nutshell, it’s a value of the road not taken.

How does opportunity cost affect your life?

Opportunity costs apply to many aspects of life decisions. Often, money becomes the root cause of decision-making. If you decide to spend money on a vacation and you delay your home’s remodel, then your opportunity cost is the benefit living in a renovated home.

What is the best definition of opportunity cost answers com?

Opportunity cost can be defined as the best alternative choice that you forgo when making an economic decision.

What is the relationship between opportunity cost and scarcity?

Since consumers’ resources such as time, attention, and money are limited, they must choose how to best allocate them by making tradeoffs. The concept of trade-offs due to scarcity is formalized by the concept of opportunity cost. The opportunity cost of a choice is the value of the best alternative forgone.

What is the other name of opportunity cost?

In microeconomic theory, opportunity cost, or alternative cost, is the loss of potential gain from other alternatives when one particular alternative is chosen over the others.

What is the concept of scarcity and opportunity cost?

At the most basic level: Scarcity means that there are never enough resources to satisfy all human wants. Economics is the study of the trade-offs and choices that we make, given the fact of scarcity. Opportunity cost is what we give up when we choose one thing over another.

What is opportunity cost give an example?

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. … The opportunity cost of taking a vacation instead of spending the money on a new car is not getting a new car.

How useful is the concept of opportunity cost?

Opportunity Cost helps a manufacturer to determine whether to produce or not. He can assess the economic benefit of going for a production activity by comparing it with the option of not producing at all. He may invest the same amount of money, time, and resources in another business or Opportunity.