While opportunity cost is the
cost of opting one course of action and foregoing another opportunity
, a trade-off is the course of action given up to perform the preferred course of action.
What is the relationship between opportunity cost?
In microeconomic theory, the opportunity cost of an activity or option is
the loss of value or benefit that would be incurred (the cost) by engaging in that activity or choosing that option
, versus/relative to engaging in the alternative activity or choosing the alternative option that would offer the highest return in …
what are tradeoffs? … How does an opportunity cost differ from a trade-off? Trade offs are
all the alternatives that we give up when we choose one course of actions over others
, and opportunity cost is the most desirable alternative given up as a result of a decision. what are “guns or butter” decisions?
What is the difference between a trade-off and an opportunity cost quizlet?
The difference between trade offs and opportunity cost is that
a trade-off is all the resources that are lost when a consumer makes a choice
. An opportunity cost is the most desirable opportunity given up when a consumer makes a choice. You just studied 8 terms!
How is opportunity cost different from a trade-off?
The opportunity cost of an economy investing resources in new capital goods is the production of consumer goods given up for today. A trade-off
arises where having more of one thing potentially results in having less of another
.
What is the rule for using opportunity cost to make decisions?
In business, opportunity costs play a major role in decision-making. If you decide to purchase a new piece of equipment, your opportunity cost is the money spent elsewhere.
Companies must take both explicit and implicit costs into account
when making rational business decisions.
What is the importance of opportunity cost?
The concept of Opportunity Cost
helps us to choose the best possible option among all the available options
. It helps us to use every possible resource tactfully, efficiently and hence, maximize economic profits.
Why is opportunity cost important in decision making?
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 a real life example of opportunity cost?
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). A commuter takes the train to work instead of driving.
What is an example of a trade-off?
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.
Why is opportunity cost important when you make choices quizlet?
Opportunity cost is the most desirable alternative given up as the result of a decision. It is important because
it creates opportunities and variation in the economy
.
Why do all choices involve trade-offs?
Every decision involves trade-offs because
every choice you want results in picking it over something else
. You can't always get what you want, like having two things. … Opportunity cost means choosing the better one of two ideas. There will always be an alternative; what could have happened instead.
What is a trade-off give at least one example?
The definition of trade off is an exchange where you give up one thing in order to get something else that you also desire. An example of a trade off is
when you have to put up with a half hour commute in order to make more money
. noun.
What is another word for trade-off?
agreement
.
arrangement
.
compensation
.
contract
.
Is an opportunity cost a trade-off?
For example, when we sacrifice one thing to obtain another, that's called 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.
What is opportunity cost and how does it affect 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.”
