Opportunity cost
refers to what you have to give up to buy what you want in terms of other goods or services. When economists use the word “cost,” we usually mean opportunity cost.
When making an economic choice the alternative you give up is A?
The alternative that you give up when you make an economic choice is called
a trade-off
. Usually, trade-offs do not require all-or-nothing choices. Rather, they involve giving up some of one thing to gain more of another.
What do we call choosing one course of action over another?
Key Terms. •
trade-off
: the alternatives that we give up when. we choose one course of action over another.
What do economists call exchanging one good for another?
Bartering
is the exchange of goods and services between two or more parties without the use of money. It is the oldest form of commerce. Individuals and companies barter goods and services between each other based on equivalent estimates of prices and goods.
What is the most desirable alternative given up as a result of a decision?
The most desirable alternative given up as a result of a decision is known as
opportunity cost
. Trade-offs are all the alternatives that we give up whenever we choose one course of action over others.
What is the one most valuable thing you give up when making a decision?
Opportunity cost
is what you give up (the benefits of the next best alternative) when you make a choice.
How do individuals make choices?
When individuals make decisions,
they are necessarily deciding between taking one course of action over another
. In doing so, they are choosing both what to do and, by extension, what not to do. The value of the next best choice forgone is called the opportunity cost.
What do you call it when you choose one more of something?
Opportunity cost
refers to what you have to give up to buy what you want in terms of other goods or services. When economists use the word “cost,” we usually mean opportunity cost.
How is thinking at the margin helpful?
Comparing opportunity costs and benefits at the margin will enable
you to decide how many hours to study
. Such a comparison could help someone decide how much money to spend on a car, how many hours to work, and how much time to spend on the computer (not working).
What is opportunity cost and its importance 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.”
Who started barter system?
The history of bartering dates all the way back to 6000 BC. Introduced by Mesopotamia tribes, bartering was adopted by
Phoenicians
. Phoenicians bartered goods to those located in various other cities across oceans. Babylonian's also developed an improved bartering system.
What was one of the major inefficiencies during a barter economy?
It is said that barter is ‘inefficient' because: There needs to be a ‘double coincidence of wants' … If a person wants to buy a certain amount of another's goods, but only has for payment one indivisible unit of another good which is worth more than what the person wants to obtain, a barter transaction cannot occur.
What is a free exchange?
A free market is
one where voluntary exchange and the laws of supply and demand provide the sole basis for the economic system
, without government intervention. A key feature of free markets is the absence of coerced (forced) transactions or conditions on transactions.
What does it mean to think at the margin?
It means to think about your next step forward. … If you think at the margin, you are thinking
about what the next or additional action
means for you.
What are guns or butter decisions?
Guns and butter generally refers to
the dynamics involved in a federal government's allocations to defense versus social programs when deciding on a budget
. Both areas can be critically important to a nation's economy. … Times of war can have a substantial effect on a country's economy and its societal progression.
In what kind of an economy does the government make all the decisions?
A centrally planned economy, also known as a command economy
, is an economic system in which a central authority, such as a government, makes economic decisions regarding the manufacturing and the distribution of products.
