Question

briefly explain the concept of opportunity cost with example

Answer 1

In microeconomic theory, the opportunity cost, also known as alternative cost, is the value (not a benefit) of the choice in terms of the best alternative while making a decision. ... Opportunity cost is a key concept in economics, and has been described as expressing "the basic relationship between scarcity and choice."

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 cannot spend the money on something else.

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Answer 2

Answer :

Opportunity Cost Of Production of a commodity refers to the cost which the producer has to sacrifice in terms of the next best alternative which could be produced out of that cost in order to produce every unit of the given commodity..

Example : If an economy can produce 2000 Quantils of rice or 4000 Quantils of Wheat with the given resources and the economy choose to produce wheat then the opportunity cost will be 2000 Quantils of rice which the economy has sacrificed....