How does the concept of opportunity cost and the idea oftradeoffs rela...

How does the concept of â€œopportunity costâ€ and the idea of â€œtradeoffsâ€ relate to decision-making? Why does...

80.2K

Verified Solution

Question

Economics

How does the concept of â€œopportunity costâ€ and the idea ofâ€œtradeoffsâ€ relate to decision-making?
Why does the term â€œopportunity cost of capitalâ€ mean?
What is â€œdeciding on the marginâ€?
What is the difference between â€œpositive economic analysisâ€ andâ€œnormative economic analysisâ€?

Answer & Explanation Solved by verified expert

3.9 Ratings (563 Votes)

1 In both economic and noneconomic decisions individuals face the cost of opportunity One of the simplest ways to consider the costs of opportunity for an person is to consider a student choosing to study The student by deciding to study implicitly chooses not to go to a party hang out with friends or catch up on some muchneeded sleep The opportunity cost in this case is not easily represented in dollars and cents but is just as true The idea of trade offs due to scarcity is formalized by the idea of the cost of opportunity The opportunity cost of a option is the value of the best overlooked alternative In other words the opportunity cost of producing a bottle of water is the See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

How does the concept of â€œopportunity costâ€ and the idea of â€œtradeoffsâ€ relate to decision-making? Why does...