Which Of The Following Is The Best Definition Of Opportunity Cost?

What is economics in own words?

Economics is the study of how society uses its limited resources.

Economics is a social science that deals with the production, distribution, and consumption of goods and services.

It focuses heavily on the four factors of production, which are land, labor, capital, and enterprise..

What is the definition of opportunity cost quizlet?

Explain the concept of opportunity cost. Opportunity Cost is when in making a decision the value of the best alternative is lost. e.g. choosing electricity over gas, the opportunity cost is what you’ve lost from not picking gas. Firms take decision about what economic activity they want to be involved in.

What is opportunity cost and example?

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.

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 is an example of opportunity cost quizlet?

The cost of making a choice is that the next best alternative is forgone. This is know as opportunity cost. For example if a Government decides to make the choice of devoting more resources to the NHS then the opportunity cost is devoting those resources into the education system.

Why is opportunity cost important in decision making?

Opportunity cost can help you make better decisions because it helps put your decisions in context. Costs and benefits are framed in terms of what is most important to you at the time of the decision.

What is the simple meaning of economics?

Economics is a social science concerned with the production, distribution, and consumption of goods and services. It studies how individuals, businesses, governments, and nations make choices about how to allocate resources.

Which is the best example of a microeconomic issue?

Most people are introduced to microeconomics through the study of scarce resources, money prices, and the supply and demand of goods and services. For example, microeconomics is used to explain why the price of a good tends to rise as its supply falls, all other things being equal.

What is opportunity cost simple definition?

Opportunity cost is the profit lost when one alternative is selected over another. The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision. … Opportunity cost does not necessarily involve money.

Which of the following is the correct definition of utility?

Utility is the measure of : the relative satisfaction, enjoyment, or contentment a person receives from consuming a good or service. The law of Diminishing Marginal Utility means that the more of a good that a person receives, the added utility from each additional unit ______________. decreases.

What is opportunity cost and why is it important?

Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. The idea of opportunity costs is a major concept in economics. Because by definition they are unseen, opportunity costs can be easily overlooked if one is not careful.

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 is opportunity cost in your own words?

Opportunity Cost Explained Opportunity cost is the loss or gain of making a decision. If you had to choose between purchasing or selling a stock, you could make immediate gains from the sale, but you lose the gains the investment could bring you in the future.

Which of the following is an example of an opportunity cost?

The opportunity cost of taking a vacation instead of spending the money on a new car is not getting a new car. When the government spends $15 billion on interest for the national debt, the opportunity cost is the programs the money might have been spent on, like education or healthcare.

Which of the following is the best definition of economics?

Which of the following offers the best definition of economics? a. Economics is the study of how to eliminate scarcity associated with the goods and services we produce. … Economics is the study of how people choose to allocate their scarce resources to satisfy their unlimited wants.